US ethylene cracker margins dipped nearly 10% week on week to levels not seen since early August on the back of falling spot prices.
Margins using ethane/propane mix as feedstock dropped 3.31 cents/lb, or 9.8% to close Friday at 30.40 cents/lb, according to Platts data.
Margins using ethane were also down 2.92 cents/lb, or 9.6% to 27.49 cents/lb.
Spot ethylene fell 3.375 cents/lb week on week, assessed Friday at 59.75-60.25 cents/lb on a 3- to 30-day basis that reflected backwardation in the market. The assessment was the lowest since July 21, when spot ethylene was also assessed at 60 cents/lb, according to Platts data.
One veteran trader attributed the drops to weaker-than-expected demand from downstream markets despite two producers initiating tunarounds in the US Gulf Coast region this month.
In feedstocks for the week, ethane shed .50 cents/lb to close at 71.25 cents/gal, while propane rose 1.60 cents/gal to 158.70 cents/gal.
Light naphtha was again the lowest-yielding feedstock and posted the biggest drop, down 5.35 cents/lb to 9.47 cents/lb.
Margins using propane as feedstock dropped more than 21% -- 4.33 cents/lb -- to 15.70 cents/lb.
The cracker margin estimates use the current spot price and yields of the various cracker products from cracking various light and heavy feedstocks.
On Monday, spot ethylene was heard talked at 59.75-60.50 cents/lb, with October slightly lower at 59.50-60.125 cents/lb.
