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Wednesday, December 1, 2021

US ethylene at a six-year low on oversupply, high run rates

August US spot ethylene fell 2 cents/lb Thursday to 23.75-24.25 cents/lb FD USG for August deliveries on continued talk of declining downstream derivative prices, weak energy complex, lengthening supply and inventories.

Thursday’s assessment is the lowest since August 3, 2009, when the spot price was assessed at 23.75 cents/lb, Platts data show.

In active trading on Thursday, August was traded twice in the morning at 25 cents/lb MtB Wms and at 24.25 cents/lb MtB Wms, while in the afternoon August was traded at 24 cents/lb MtB Wms and 25 cents/lb MtB-other.

After close of assessment, one August deal was concluded at 23.75 cents/lb MtB Wms, while January traded at 25.375 cents/lb MtB Wms.

Prices have seen downward pressure since late September, when a number of production expansions started up.

Early January brought more bearishness when a major transmission line was 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 over 61.7 billion lb/year, according to Platts data.

This boosted capacity has been met with little corresponding downstream expansions, resulting in oversupply.

US Gulf Coast producers are experiencing a rather uneventful 2015 to date, with ethylene prices holding to a range of 32.75-42 cents/lb until late July.

Prices have recently dropped 9.125 cents/lb (or 28.6%) from the 33.625 cents/lb assessment on July 31 to Thursday’s 24 cents/lb.

By contrast, in the same period in 2014 — January to early August — ethylene prices were in a much wider range of 49.75-70 cents/lb, before a number of unplanned outages in third-quarter 2014 pushed prices to a record high in mid-September of 76.25 cents/lb FD USG, Platts data showed.

Sources also pointed to high US production rates. Second-quarter ethylene production was 14.441 billion lb, up 695.6 million lb from Q1 and up 983.3 million lb from Q2 2014, according to American Fuel and Petrochemical Manufacturers data.

Second quarter production was the highest quarterly output since fourth quarter 2004’s 14.831 billion lb, the AFPM report showed.

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