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| US ethylene for July seen headed for 2-month settlement |
| HOUSTON (ICIS)--US ethylene contracts for July remained unsettled this week, market sources said on Friday, pointing to a possible two-month deal with August as a result of the delay in the settlement process. Ethylene for June settled at 39.50 cents/lb ($871/tonne, €662/tonne), down by 5.25 cents/lb from May. Market sources estimated contracts would drop by another 2.50-2.75 cents/lb in July should the market still reach an agreement for a one-month settlement. The expected drop was due to lower ethylene spot prices in July and a drop in feedstock ethane values. Ethylene spot prices in July averaged around 33.00 cents/lb, down from 35.00 cents/lb in June, a source said, adding that production costs dropped by 3.00 cents/lb due to lower ethane prices. Feedstock ethane remained on a downtrend this week, hovering at around 45.50 cents/gal early on Friday. That was down from 48.75 cents/gal on Monday. Meanwhile, spot ethylene gave back some of its gains from the previous week, as August traded down to 36.50 cents/lb. That was a decline from a deal at 37.00 cents/lb on 30 July. Material for fourth-quarter delivery traded at 32.00 cents/lb early in the week. Ethylene bid/offers for August were wide apart on Friday at 30.00-37.00 cents/lb. The loss of momentum in the spot market was in line with lower values for feedstock ethane. But anticipated supply length was also playing a role in light of the expected restart of Dow Chemical’s Freeport LHC-7 cracker in Texas, which a source said could happen early next week. The 612,000 tonne/year unit was shut down on 14 July following an outage at a steam turbine. A Dow spokesperson said work was ongoing to bring the plant back online. |