Margins for U.S. ethylene narrow to US$0.3161/lb. for week ending Sept. 9 from prior week's US$0.3434/lb. on soft spot market, increased production costs

LOS ANGELES , September 13, 2011 () – Margins for U.S. ethylene using ethane feedstock narrowed to 31.61 cents per pound in the week ending Sept. 9 from the prior week’s 34.34 cents/pound partly on a softer spot market and increased production costs, ICIS news reported Sept. 12.

ICIS reported that spot prices declined almost 4% in the period, as producers saw their narrowest margins since early August. Sufficiently supply was most likely the reason for the decline, according to market sources.

Contracts for September ethylene were also down from last week’s 63.000-63.875 cents/lb. to 60.000-62.000 cents/lb. on sufficient supply and weaker demand for derivatives, especially polyethylene. About 20% of U.S. PE production is exported, and a decline in Asian PE prices is curbing demand for U.S. product.

The third factor pulling contract prices for September down is talk regarding the postponement of cracker maintenance. ICIS cited reports that Dow Chemical Co. is postponing a 30-day turnaround originally planned for next month at its 610,000-tonne per year cracker in St. Charles, Louisiana. The turnaround could take place in January 2012 or in the first half of 2013, market players told ICIS.

The September U.S. ethylene bid-offer split was quoted Sept. 12 at 59.000 cents-61.000 cents/lb. Offers for October ethylene came in marginally lower at 60.125 cents/lb., while there were no offers yet for November. Bids for November came in at 57.000 cents/lb., ICIS reported.

The primary source of this article is ICIS news, Surrey, England, Sept. 12, 2011.

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