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US ethylene costs sink to four-month low in April

05.02.2013  | 

Contributing to the recent softening price trend in ethylene was the subdued trade in polyethylene, ethylene's largest plastic derivative. Weaker prices for crude oil and other energy components left export buyers wondering if US prices for polyethylene would move lower.

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US ethylene prices reached their lowest level since early December in early April, rebounded slightly but couldn't sustain the upward momentum and ended the month several cents lower, according to a report released Thursday from PetroChem Wire.

Ethylene prices on the US Gulf Coast, which were just under 61 cents/lb on April 1, fell to 54 cents on April 8, the lowest level since December 10. They rebounded slightly in the latter part of this month, reaching just over 57.5 cents on April 29, but never recovered to the 60-cent or higher level seen in March and the very beginning of April.

Contributing to the recent softening price trend in ethylene was the subdued trade in polyethylene, ethylene's largest plastic derivative. Weaker prices for crude oil and other energy components left export buyers wondering if US prices for polyethylene would move lower.

There were reports that traders were opting to source material from Asia while waiting for US polyethylene prices to become more workable for export.

"We saw ethylene test some support and resistance points during April," said Kathy Hall, PetroChem Wire's chief editor. "The month started out with some supply concerns, but the lack of expected demand from downstream markets balanced those concerns out. After finding what appeared to be a floor at 54 cents, ethylene steadily found its way back into the mid- to upper 50s, where it ended the month."

Recent and ongoing plant outages have kept some suppliers' polyethylene inventories snug. Still, due to lackluster demand, polyethylene prices have been weakening slightly. Spot polyethylene, which sold for 66.5 cents/lb at the beginning of April, was selling around 65 cents in late April, the same level seen in mid-March.

Meanwhile, prices for the raw materials used to make ethylene were higher at the end of April than at the beginning of the month. Ethane increased in price by 0.75 cents/gal, or about 2.5%. Propane, another ethylene raw material, increased in price by roughly 2.6 cents/lb or about 2.75%.



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