US ethylene costs fall to lowest level since August

Prices for the chemical building block ethylene dropped to nearly 50 cents/lb at the end of November, their lowest level since early August, according to a new chemical industry report from PetroChem Wire.

The fall reflected ample supplies and slower sales volumes for the key plastic derivative, polyethylene, the analysts said.

US ethylene prices ended November at 50.375 cents/lb, down from 54.5 cents/lb at the end of October and close to the previous low on August 9 of 50.125 cents/lb.

On a cents-per-gallon basis, the November price decrease is equal to a 12.25-cent decrease during the month.

Ethane and propane, two of the raw materials used to make ethylene, also saw price decreases in November. The ethane price fell by 5 cents/gal and propane fell by 15.5 cents/gal.

North American polyethylene sales slowed and inventories increased in the beginning of the fourth quarter following very strong sales during the summer months. June, July and August were the strongest three-month period for US polyethylene sales since 2006.

Hurricane Sandy contributed to the more recent domestic resin sales slowdown as Northeast plastics converters' operations were temporarily disrupted in late October and early November.

"The approach to the end of the year is usually a slow time for sales as many companies seek to keep inventories lean in December. Without a dramatic supply interruption, the drift lower throughout the chain is somewhat expected," said Kathy Hall, PetroChem Wire's chief editor.

"However, as these markets evolve, we see more activity in forward months. During November, the 2013 market was quite active for ethylene. Prices for the first quarter of 2013 are higher than they were for November and December."

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