Market and product
US Nov ethylene contracts settle at 9.9% decline
The settlement puts November ethylene contracts at 45.5 cents/lb ($1,003/tonne), down 5.0 cents/lb from October.
This is the lowest ethylene contracts have been since sitting at 45.25 cents/lb for March 2014.
The drop was in line with market expectations, as spot prices tumbled in November and cash costs also fell.
Average ethylene spot prices fell to 53-54 cents/lb from 63-64 cents/lb, putting them back near levels seen in the first and second quarter.
This was mostly because of several cracker restarts in November. Since March, sources said US ethylene production had lost an average of 8-12% of capacity.
Ethylene supply levels were also boosted by weaker demand in November, as downstream units ran slower because of declining export advantages and high ethylene prices.
Polymers producers in the US said they had to lower operating rates to meet only contractual demands because they could not compete in the global spot market.
Cracker cash costs also fell in November, as feedstock costs for ethane, propane and naphtha plunged along with overseas prices.
Co-product credits for propylene and benzene came down in November, but could not offset the losses in feedstocks, allowing cash costs to fall less than 1 cent/lb.
US ethylene contracts are typically settled at the start of the month for the previous month.
Major US ethylene producers include Chevron Phillips Chemical, ExxonMobil, INEOS, LyondellBasell and Shell Chemical.
Major buyers include Axiall, Dow Chemical, Occidental Chemical and Total.
