Ethylene prices sliding
By Purchasing Staff -- Purchasing, 3/15/2006 7:00:00 AM
Weaker demand and falling feedstock costs are pushing U.S. ethylene prices down; in fact, Purchasingdata.com analysis shows U.S. spot ethylene has plunged 40% since last autumn to 38¢/lb in the first week of March.
Analyst Edlain Rodriguez at Goldman Sachs in New York anticipates that March ethylene contract prices will have continued their recent decline, and believes national spot pricing could fall as low as 32¢ by later this month. It may not dip that low, though, since Lyondell Chemical’s OPII unit in Channelview, Texas, is expected to be offline for two weeks because of a recent fire. Since the fire, spot prices have firmed a bit to the mid-30s range, according to a market survey by Purchasing’s sister firm ICISpricing.com (formerly ICISI-LOR). Analysts tells Reuters that European and U.S. companies will not add much by way of new capacity, but have little control over what happens elsewhere. Analyst Christian Faitz, at Dresdner Kleinwort Wasserstei in Frankfort, Germany, for example, points to new capacities in the Middle East for ethylene, a building block chemical. "Prices of ethylene set the tone for prices of more complex plastics, and an oversupply would rock the boat in petrochemicals."
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