HOUSTON ,July 06-US ethylene contracts for June fell by 12% to settle at 39.50 cents/lb ($871/tonne, ?97/tonne), pressured by lower spot prices and reduced production costs, market sources said on Tuesday.
The 5.25-cent/lb reduction was the third consecutive monthly drop for contracts, which fell by a combined 10.75 cents/lb in April and May.
The main driver behind the continued decline was a softening in spot prices, a producer said, adding that a slide in feedstock ethane put additional pressure on contracts.
Ethane, which accounts for around 60% of US ethylene feedstock, averaged 52.50 cents/gal in June, down from 55.20 cents/gal in May and 56.60 cents/gal in April.
Ethane ended Friday at 45 cents/gal as a result of a drop in demand and continued ample supply, a market source said.
Supply length was also cited as the core factor behind a sharp decline in ethylene spot prices since April.
Spot ethylene in June averaged 33.31 cents/lb, a reduction of nearly 18% from 40.53 cents/lb in May. Average prices for the monomer were 62.75 cents/lb in April, according to ICIS.
The drop in spot prices in June was briefly interrupted by a mid-month outage at a Texas cracker operated by Chevron Phillips Chemical.
The 803,000 tonne/year unit in Port Arthur was taken off line during the weekend of 19-20 June following a disruption in steam supply.
The shutdown helped balance the market, but supply could be long again after that unit restarts, a source said.
A Chevron Phillips spokesperson last week declined to comment on a planned restart date for the cracker.
US ethylene prices were also pressured by weakening demand, as a drop in Asian monomer prices limited export opportunities down the production chain.
Spot ethylene last traded on Friday at 30.00 cents/lb for July delivery. The monomer was bid at 29.50 cents/lb on Tuesday with no offers. Ethylene was bid at 27.00 cents/lb for September with no offers.
Major US ethylene producers include Chevron Phillips Chemical, ExxonMobil, INEOS, LyondellBasell and Shell Chemicals.
Buyers include Dow Chemical, Georgia Gulf, Occidental Chemical (OxyChem) and Total.
($1 = ?.80)
The 5.25-cent/lb reduction was the third consecutive monthly drop for contracts, which fell by a combined 10.75 cents/lb in April and May.
The main driver behind the continued decline was a softening in spot prices, a producer said, adding that a slide in feedstock ethane put additional pressure on contracts.
Ethane, which accounts for around 60% of US ethylene feedstock, averaged 52.50 cents/gal in June, down from 55.20 cents/gal in May and 56.60 cents/gal in April.
Ethane ended Friday at 45 cents/gal as a result of a drop in demand and continued ample supply, a market source said.
Supply length was also cited as the core factor behind a sharp decline in ethylene spot prices since April.
Spot ethylene in June averaged 33.31 cents/lb, a reduction of nearly 18% from 40.53 cents/lb in May. Average prices for the monomer were 62.75 cents/lb in April, according to ICIS.
The drop in spot prices in June was briefly interrupted by a mid-month outage at a Texas cracker operated by Chevron Phillips Chemical.
The 803,000 tonne/year unit in Port Arthur was taken off line during the weekend of 19-20 June following a disruption in steam supply.
The shutdown helped balance the market, but supply could be long again after that unit restarts, a source said.
A Chevron Phillips spokesperson last week declined to comment on a planned restart date for the cracker.
US ethylene prices were also pressured by weakening demand, as a drop in Asian monomer prices limited export opportunities down the production chain.
Spot ethylene last traded on Friday at 30.00 cents/lb for July delivery. The monomer was bid at 29.50 cents/lb on Tuesday with no offers. Ethylene was bid at 27.00 cents/lb for September with no offers.
Major US ethylene producers include Chevron Phillips Chemical, ExxonMobil, INEOS, LyondellBasell and Shell Chemicals.
Buyers include Dow Chemical, Georgia Gulf, Occidental Chemical (OxyChem) and Total.
($1 = ?.80)
