HOUSTON (ICIS)--US ethylene supply remains unbalanced between Texas and Louisiana, keeping a firm ceiling on the lower Texas prices and a firm floor on the higher Louisiana prices ahead of the American Fuel & Petrochemical Manufacturers’ (AFPM) International Petrochemical Conference (IPC).
Sources said spot ethylene remains long in Texas because of the ongoing shutdown of the Evangeline Pipeline, while spot ethylene in Louisiana is short.
This has kept spot prices on the benchmark Williams System in Texas in the low-50s cents/lb since early February.
US Williams ethylene has traded between 50-53 cents/lb ($1,102-1,168/tonne) since 3 February.
The pipeline shutdown has prevented several US ethylene producers in Texas from moving their ethylene to preferred downstream units in Louisiana.
This has also tightened ethylene in Louisiana, putting it at a 13-15 cent/lb premium to Texas material.
Sources are mixed regarding the likely return of the pipeline, with some expecting a late-March or April return, and others expecting a restart as late as May.
Ethylene prices in Louisiana should also be eased once Williams Olefins restarts its Geismar cracker in Louisiana with additional capacity in June.
The cracker is expected to have an ethylene capacity of 885,000 tonnes/year after the restart.
“The question will become, once things open up between Texas and Louisiana, what moves?” a source asked. “Does Texas come up, or does Louisiana come down?”
Sources said a spread of 3-4 cents/lb between the two regions is common, but that Texas ethylene is likely to rise once the pipeline is restarted.
Prices are also expected to increase in April and May because of several ongoing and planned cracker turnarounds.
Major US ethylene producers include Chevron Phillips Chemical, ExxonMobil, INEOS, LyondellBasell and Shell Chemical.
Major buyers include Axiall, Dow Chemical, Occidental Chemical and Total.