US spot ethylene prices for October delivery fell 1.25 cents Tuesday to 18.25-18.75 cents/lb FD USG on concerns of oversupply, reduced storage capacity and climbing heavy feedstocks.
The assessment matches a low set December 19, 2008.
In active trading Tuesday, October deals were heard in the morning at 19 cents/lb MtB Wms and 20.25 cents/lb via the Choctaw pipeline system in Louisiana. In the afternoon two October and one November deals were heard at 18.5 cents/lb and 20 cents/lb MtB Wms, respectively.
Sources talked of an ongoing planned maintenance work at one of the storage caverns in Mont Belvieu, Texas, a major trading hub.
Additionally, climbing heavier feedstock was leading to cracking more ethane which in turn is producing more ethylene, further exasperating the lengthening ethylene supply, sources said.
Lastly, two Texas production facilities are to resume operations by midmonth — Ineos’ Olefins No. 2 in Alvin and Flint Hills Resources in Port Arthur — after turnarounds. The startups bring plant outages down to one. Shell Chemical started 40-60 day planned turnaround last week at its Olefins No.5 in Norco, Louisiana, sources said.
Spot ethylene has declined 57.75 cents from a record 76.25/lb September 19, 2014. Prices have seen downward pressure since late September 2014, when a number of production expansions started up. Early January brought more bearishness when a major transmission line shut for repairs.
Six expansions with total capacity of 2 billion lb have been brought online in the past year, pushing the total annual US ethylene production to more than 61.7 billion lb/year, according to Platts data. This boosted capacity has been met with little corresponding downstream expansions, resulting in oversupply.
In early April, Williams Olefins resumed operations after a 21-month unplanned outage at its Geismar, Louisiana, plant, while Boardwalk Partners’ Evangeline pipeline system also resumed operations in June, bringing ethylene from Texas to Louisiana.
