US spot ethylene prices were expected to increase back into mid 60-cent/lb territory over the next couple of weeks as major turnarounds near, a source close to a major olefins producer said Monday.
"I think it will move up as these (turnarounds) become more more evident in the minds of people," the source said.
After opening August particularly strongly -- trading as high as 64.50 cents/lb -- spot ethylene shed 2.5 cents/lb last week as volatility in the financial markets and economic concerns worldwide dragged down the energy complex.
Ethylene was heard talked Monday in a range of 59.75-62.50 cents/lb and assessed on either side of 61.125 cents/lb, flat to Friday.
Bids were stronger Tuesday morning, with August buy ideas seen around 61.75 cents/lb.
Perceived tightness in the market this summer has been exacerbated by a number of small unplanned outages that have helped keep ethylene above the 60-cent/lb mark since July 21, according to Platts data.
At least four major cracker turnarounds -- amounting to an estimated 3.1 million tons/year of capacity -- are scheduled for September and October in the US Gulf Coast region.
Formosa Plastics USA has confirmed a turnaround Sep 1-Oct 10 at its Point Comfort, Texas, Olefins unit II, and ExxonMobil (Baton Rouge, Louisiana) is also expected to undergo a maintenance early next month, sources said.
Shell Chemical (Deer Park, Texas) and Dow Chemical (St. Charles, Louisiana) are set to undergo maintenances in October, market sources said.
"I think ethylene will strengthen," the source said. "the turnarounds are nearing, crude is rebounding and ethane is back above 70 cents/gallon."
NYMEX September crude oppened $2.14 lower Tuesday at $85.74/barrel, tracking with equity markets. Mont Belvieu purity ethane was last assessed Monday on either side of 72 cents/gallon, less than a week after temporarily dipping below 68 cents/gallon.
