February NYMEX Ethylene Prices See Big Gains: PetroChem Wire

Jan 26, 2010, 09:25 ET from PetroChem Wire

HOUSTON, Jan. 26 /PRNewswire/ -- U.S. ethylene prices saw significant gains during January, with the February New York Mercantile Exchange's (NYMEX) cleared ethylene settling and expiring at $0.4675 per pound. The contract, which began trading in July 2009, settled last month at $0.3675 per pound. Ethylene trades in 100,000-pound lots per contract on the NYMEX's Clearport system.

In the overall cash markets, ethylene traded up from $0.41 cents to $0.4675 per pound during January, according to PetroChem Wire (PCW), a daily U.S. petrochemical industry newsletter. PCW's cash market assessments are used to settle the cleared NYMEX contracts. Typical ethylene deals are a minimum of 3 million to 5 million pounds in size, or 30 to 50 lots per trade. So far in January, more than 300 million pounds of ethylene have traded in the spot market.

"Supply concerns have supported ethylene prices in January, and they have continued to rise, disconnecting from energy prices during the past week," said Kathy Hall, executive editor of PCW. "Downstream demand for polyethylene resin has also been relatively strong, making ethylene a hot commodity again."

Maximum steam cracker operating rates in the U.S. Gulf fell below 90% during January. Maximum operating rates were at 88% for steam crackers in Texas and 91% in Louisiana, a combined rate for the region of 89%.

By comparison, steam cracker operating rates a year ago were around 55% as the region recovered from the hurricanes that hit Louisiana and Texas in September 2008, and spot ethylene was trading at $0.17 per pound.

Steam crackers in Texas and Louisiana produce more than 95% of the country's ethylene. The 26 steam crackers in Texas and 10 in Louisiana produce a combined total of about 150 million pounds of ethylene each day.

Ethylene is a building block chemical used in the production of plastic resins and a variety of solvent chemicals, all used in major consumer manufacturing products.

For more information on the chemical benchmark of ethylene, visit www.petrochemwire.com.

The PetroChem Wire is a daily newsletter serving the petrochemical industry. It counts every major petrochemical and refining company among its subscribers, as well as many major manufacturing concerns, global conglomerates, industry consultants, equity analysts and government agencies.

SOURCE PetroChem Wire