VINACHEM

The US spot ethylene market reached price levels not seen since January and May 2022 in the week to Aug. 16, continuing its upward trend year to date.

Platts assessed August spot Mont Belvieu ethylene at 33 cents/lb Aug. 15. These levels were last seen on May 5, 2022, when it was assessed at 33.25 cents/lb, according to Platts historical data. For spot Choctaw ethylene, the peak was reached Aug. 13 at 38 cents/lb, the highest level since Jan. 25, 2022, when it was assessed at 40.50 cents/lb.

The spread between Mont Belvieu and Choctaw reached a high of 7.75 cents/lb at the end of July and has tightened since, with a current 5-cent/lb difference between both locations. Sources said this has been in response to logistic issues between Texas and Louisiana, which have tightened supply conditions in the latter, which adds to ongoing supply issues.

Nova Chemicals experienced an unplanned outage in its ethylene cracker in Geismar, Louisiana, a company representative confirmed July 25. The facility produces 1.95 billion pounds of ethylene annually, in addition to 114 million pounds of polymer-grade propylene and 13 million gallons of crude butadiene.

Spot prices for both locations rose following supply and power disruptions from Hurricane Beryl.

"Market was destabilized by fully integrated producers becoming buyers," a source said. Hurricane season is not over, and market participants have been on the look out to weather conditions that could impact production in the US Gulf Coast.

Feedstock Enterprise ethane prices dropped significantly in the beginning of the month, being assessed at a four-year low at 11.375 cents/lb Aug 3. This was in line with movements in natural gas prices and due to an oversupplied market because of ethylene outages.

Commodity Insights analysts said that since the Ethane Cracker Margin has continuously risen -- reaching levels not seen in more than two years and last assessed at 29.91 cents/lb Aug. 15 -- the US ethylene market is still at an advantage compared with Asia and Europe, despite spot prices being higher.

The price increase is related to outages and supply issues, but there is still a regional feedstock advantage, they said.

The market expectations are for prices to stabilize once the hurricane season is over, which could open arbitrage to other regions.

However, downstream markets have been affected by this price hike.

A PVC source said that rising ethylene prices are impacting producers' economics, highlighting that production costs are a significant factor. This is particularly relevant for the export PVC market, where upstream markets play a crucial role, the source said.   – –