Us ethylene market price rises with demand

Ethylene contract settlement prices for most U.S. market participants rose by 1.0 cents / pound in July due to cracking unit problems restraining supply and continued to recover demand, affected by rising spot prices and cash costs.

The contract price is the third consecutive increase since it bottomed out in April, when oil prices plummeted and demand was hit by the coronavirus.

The July contract price rose to 25.5 cents per pound from 24.5 cents per pound in June (562 dollars per ton).

The contract price of ethylene reached its highest level since January, when the settlement price was 25.75 cents / pound.

The average spot price rose by about 2.5 cents / pound due to rising cash costs and recovering demand.

In the first few months, the trading price of ethylene in July was 14.75-16.00 cents / pound, up from 11.75-13.50 cents / pound in June.

Due to the cost advantage of the United States and the recovery of Asia from the impact of coronavirus demand, healthy arbitrage on Asia makes exports one of the bright spots in the U.S. ethylene demand prospects. According to ICIS supply and demand data, US ethylene exports increased by 35% from January to May.

The demand for polyethylene (PE), the largest derivative of ethylene, was unexpectedly strong in the context of the coronavirus crisis, mainly due to the large use of polyethylene in non durable consumer goods such as food packaging.

The cracking problems affecting supply in July included BASF total’s plant in Port Arthur, Texas, Ineos’s plant in chocolate Bay, Texas, the Formosa Plastics Company’s plant in conford, Texas, and Dow’s plant in Freeport, Texas.

Propylene and benzene by-product contracts rose in July. Butadiene (BD) is still weak, but is improving slowly.

Ethylene is an important petrochemical raw material, which is used to produce polyethylene, ethylene glycol (eg) and polyvinyl chloride (PVC) products.

Major ethylene producers in the United States include Chevron Phillips Chemical, Dow, ExxonMobil, Exxon olefins and polymers, LyondellBasell and shell chemical.