Ethylene: It's all about the price
Staff -- Purchasing, 12/9/2004 2:00:00 AM
After a period of low pricing due to overcapacity and a soft chemical-using economy, ethylene prices have risen by 44% in the past 24 months—with the bulk of the boost coming in the past six months because of higher energy and feedstock prices and continued strong demand. That's why spot prices are around 33¢. Producers would love to see additional hikes of 3-5¢/lb and buyers seem to think their suppliers will get them. That's since 50% of the chemical buyers polled in November foresee ethylene price hikes through the first quarter of 2005. Analyst Frantz Price at Global Insights is bullish on ethylene, as well: "We see demand for this chemical gaining more ground over the next couple of years, as the manufacturing recovery gathers momentum. We also see prices remaining firm as energy and feedstock costs stay at high levels." There is a lot of talk about offshore sourcing of chemicals, even though U.S. ethylene producers have swung back to a cost-advantage position relative to Asia and Europe in recent months. The reason is that effective operating rates are up to 95%. So, Price notes: "Ethylene makers have no plans to increase their North American capacity," as they continue to shift their investment focus to Asia and the Middle East. "With overall demand expected to keeping its growth momentum, we see supply staying tight," says Price. "We also see prices remaining high through 2006." Of course, production disruptions or a spike in energy costs could cause 2005/2006 ethylene prices to explode toward 40¢.
Domestic PVC prices are down 9% this month
10/22/2008Tight supply will increase PVC, VCM prices
01/12/2005Dow boosts prices of oxygenated solvents
08/23/2009Tight supply is boosting PVC
12/19/2004
Now Playing: 