US spot ethylene reached a 29-month high Friday, assessed at 71.75-72.25 cents/lb FD USG, following tight supply stemming from ongoing production outages, market sources said throughout the week.
The assessment is at its highest level since the April 9, 2012, assessment of 74.125-74.625 cents/lb FD USG, Platts data showed.
September was heard offered at 73.5-74 cents/lb Mont Belvieu Williams pipeline basis, against bids heard at 71 cents/lb MtB Wms. October was heard offered at 71-74 cents/lb MtB Wms, against bids heard at 68 cents/lb MtB Wms.
The climb in prices started on Monday, after talk of ExxonMobil starting a five to six-week turnaround at its Baytown Olefins Plant in Baytown, Texas. A company source with knowledge of operations said the planned maintenance was underway but was unable to provide its exact duration. "Planned maintenance is expected to continue for the next several weeks and we expect to meet our contractual commitments," the source said. ExxonMobil's Baytown Olefins Plant has ethylene capacity of 960,000 mt/year.
Tight supply was also constrained from a delayed startup of Williams Olefins' Geismar, Louisiana, steam cracker, which was shut after an explosion in June 2013. Startup was to be completed in April but is currently postponed until October. Supply was also constrained by a fire at ChevronPhillips' Port Arthur, Texas, ethylene plant in early July.
The three plants account for over 9% of US production capacity and are set to restart in the fourth quarter, according to sources.
The current spot levels are pushing some producers to delay turnarounds until next year. Formosa Plastics postponed its scheduled turnaround in Point Comfort, Texas, until late October, company sources said, while Dow Chemical and ChevronPhillips are postponing scheduled turnarounds until 2015 at their respective plants in St. Charles, Louisiana, and Cedar Bayou, Texas, market sources said.
