US March ethylene contracts notch largest increase in 15 years on storm-related production issues

HOUSTON (ICIS)–US March ethylene contracts for the majority of market participants have settled at an increase of 9 cents/lb ($198/tonne) from February on lingering storm-related production issues.

The month-on-month increase is the largest since October 2005.

Steam cracker outages and rate reductions caused by mid-February’s winter storm resulted in much higher month-on-month spot prices, which outweighed lower cash costs in the contract price settlement.

The settlement puts contract prices at their highest levels since October 2014. Contract prices have increased in each of the past four months.

Front-month ethylene traded in March at 54.0-59.5 cents/lb, up from 32.5-51.0 cents/lb in February.

Ethylene supply is in the process of loosening as crackers continue to ramp up following winter storm-related shutdowns and rate reductions.

Around three-quarters of US ethylene capacity was affected by the storm.

While most plants are now online, pre-storm operating rates have not yet been achieved.

Strong consumption of ethylene derivatives and low inventories downstream continue to support demand for the monomer.

Ethylene is a key petrochemical feedstock, used to make 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.