PetroChem Wire: May NYMEX Ethylene Prices Drop

HOUSTON, April 27-U.S. ethylene prices were volatile during April, with the May New York Mercantile Exchange's (NYMEX) cleared ethylene settling and expiring at $0.50 per pound. The contract, which began trading in July 2009, settled for April last month at $0.615 per pound. Ethylene trades in 100,000-pound lots per contract on the NYMEX's Clearport system. In the overall cash markets, May ethylene traded from $0.5875 up to $0.68 during the first week of April and traded down to $0.53 per pound by April 23, 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 April, more than 150 million pounds of ethylene have traded in the spot market. "May ethylene had a wild month, as the market determined its value to April and we saw that sellers could still name their price during that first week," said Kathy Hall, executive editor of PCW. "Two weeks later, however, the market showed us that prices had perhaps overheated, and we saw a swift drop for May ethylene. Once again, the ethylene market demonstrated to the world that it is not always influenced by energy prices, as ethylene was far more volatile than crude oil during April." Ethylene did not follow energy's relative stabile trend during April, and it also disconnected from ethane prices. Ethane is a key raw material used to manufacture ethylene. Maximum steam cracker operating rates in the U.S. Gulf were slightly below 90% during April. Maximum operating rates were at 89.2% for steam crackers in Texas and 91.7% in Louisiana, a combined rate for the region of 89.9%. By comparison, steam cracker operating rates a year ago were around 85%, and spot ethylene was trading at $0.23 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.