Stretchwrap Markets Review - Polyethylene Rises But Outpaced By Ethylene Monomer
January 16 to February 15, 2010, Vol. 2, Issue 02
Ethylene monomer spot prices rose 9 cents from mid-January to mid-February, outpacing increases seen in the polyethylene market, where producers were seeking another round of contract price increases.
Polyethylene contract prices were up about 4 cpp in January, which was an increase initially sought in December. Producers were seeking to boost prices another 8 cpp in February followed by a 6 cpp increase in March. While some participants said the 8-cent initiative was starting to take hold, several said the final outcome was still yet to be determined.
Domestic resale prices for generic prime railcars of LLDPE film butene grade have moved up about 6 cpp from the middle of January to the middle of February, traders said. Railcars are now transacting in the mid 60s cpp. Offers for fresh railcars are reflecting the full 8 cpp increase. Exports slowed at the end of January and interest remained thin into February. LLDPE film is trading in the low 60s cpp FOB Houston, up about 4 cpp. Fresh railcars are being offered at levels reflecting the 8 cpp increase, which is in the mid 60s cpp range for LLDPE film butene.
Upstream, ethylene monomer rose from the 44.5 cpp in mid-January to 53.5 cpp in mid-February. The rise in prices came amid lean inventories and numerous steam cracker operational issues throughout January and February. The tightness in the market was as underscored by a steeply backwardated forward curve (more about this in an upcoming podcast) for ethylene. This pointed to strong demand for ethylene to be delivered in January, February and into March, creating a strong premium over ethylene in the outer months.
Further upstream, ethane prices rose from 73.5 in mid-January to 86.125 cpp in early February, before falling back to the 73.5-74 cpp range in mid-February. The profit margin on producing a pound of ethylene from ethane rose steadily during this period from around 8 cpp to about 20 cpp.
For more podcasts in this Stretch Wrap Markets Review series click here.
_____________________________________
The PetroChem Wire is a daily newsletter serving the petrochemical industry. It counts every major chemical and refining company among its subscribers, as well as many major manufacturing concerns, global conglomerates, industry consultants, equity analysts and government agencies.
Contact:
Mark Quiner, Senior Editor
+1 713 331 0464
mark@petrochemwire.com
www.petrochemwire.com
Copyright 2010