US May ethylene contracts settle up after six-month decline
Michael Sims
02-Jun-2020
HOUSTON (ICIS)–US May ethylene contracts settled for the majority of participants at an increase of 3.5 cents/lb on higher spot prices and cash costs.
The settlement puts May contracts at 24.0 cents/lb ($529/tonne), up from 20.5 cents/lb in April.
The settlement marks the first increase since October, when cracker outages and delayed start-ups prompted ethylene prices to rise.
Front-month ethylene traded in May at 10.125-12.750 cents/lb, up from 8.000-9.000 cents/lb in April.
Spot prices rose as higher feedstock ethane prices outweighed coronavirus-weakened demand.
US ethylene demand is expected to be weakened through much of 2020, though there is optimism for recovery in 2021.
Average cash costs increased by about 4 cents/lb month on month as drilling cuts caused ethane prices to rise on reduced supply.
A large proportion of ethane is recovered as associated gas from wells drilled in shale basins to pump oil or natural gas, so a decline in drilling activity can reduce ethane production.
Despite rising prices, ethane has remained the preferred US ethylene feedstock due to a lack of outlets for the co-products created by cracking other feeds such as propane, butane and naphtha.
Ethylene is a key petrochemical feedstock, used to make polyethylene (PE), ethylene glycol (EG) and polyvinyl chloride (PVC) among other products.
Major US ethylene producers include Chevron Phillips Chemical, Dow, ExxonMobil, INEOS Olefins & Polymers, LyondellBasell and Shell Chemical.
Click here to view the ICIS Coronavirus, oil price crash – impact on chemicals topic page.
Global News + ICIS Chemical Business (ICB)
See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.
Contact us
Partnering with ICIS unlocks a vision of a future you can trust and achieve. We leverage our unrivalled network of industry experts to deliver a comprehensive market view based on independent and reliable data, insight and analytics.
Contact us to learn how we can support you as you transact today and plan for tomorrow.