Factbox: Low ethylene prices not yet enough to spur widespread US cracker rate cuts

US spot and contract ethylene prices remain at all-time lows amid low demand, but downstream derivative margins remain strong enough for integrated producers to maintain normal rates.

At the same time, merchant crackers may reduce rates by 5%-10% as they lack downstream operations to feed unlike integrated producers, said Rob Stier, senior manager for petrochemical analytics at S&P Global Platts.

"Anybody exposed to the spot ethylene market should have already been trimming back," he said. "What you really need to look at, to see significant rate cuts beyond 5% to 10%, is negative polyethylene and ethylene glycol margins. Then you would hear of shutting a PE train and cutting back at the cracker to manage a zero margin environment."

Some downstream polymer prices are seeing all-time lows as well. On Thursday, the spot US high density PE blowmolding price fell to its lowest level since S&P Global Platts began assessing it in October 2011, and has fallen 11% since January 2.

Latin American polymer prices also saw record lows on Wednesday for some grades of HDPE, linear low-density PE and polypropylene, affecting West Coast South America and Brazil markets the most.

INFRASTRUCTURE

**Dow Chemical's 500,000 mt/year expansion at its 1.5 million mt/year cracker in Freeport, Texas, is on track to come online in the second quarter, a spokeswoman confirmed, which will make the facility the world's largest cracker.

**Formosa Plastics USA has restarted its 680,000 mt/year cracker at its Point Comfort, Texas, complex after a turnaround with spot and US contract ethylene prices at all-time lows.

**Brazilian petrochemical producer Braskem is revising and adjusting its production rates on a weekly basis to avoid unnecessary inventories, and forecasts overall utilization rate at between 70% to 75%, considering all lines and plants operating.

PRICES

Olefins

**Non-LST ethane prices fell 12.5 points to 10.125 cents/gal.

**US spot ethylene for April was flat at 8 cents/lb FD Mont Belvieu and up 0.75 cent at 8 cents/lb FD Choctaw .

**Non-LST propane prices rose 1.75 cents/gal to 32.50 cents/gal.

**April spot polymer-grade propylene prices were stable at 23.25 cents/lb FD USG, while refinery grade propylene rose 0.25 cent to 10 cents/gal FD USG.

Polymers

**Export LDPE prices fell $11 on the day to $915-$937/mt (41.5-42.5 cents/lb) FAS Houston

**Export HDPE blowmolding prices dropped $33 Thursday to $618-$640/mt (28-29 cents/lb) FAS Houston

**Export LLDPE butene prices declined $55 day on day to $596-$618/mt (27-28 cents/lb) FAS Houston

**Export homopolymer PP prices were stable at $1,058/mt FAS Houston.

**Post-consumer FOB Los Angeles bottle bales for both premium and curbside grades were steady Thursday at 18 cents/lb and 7.50 cents/lb, respectively, while the FOB Chicago marker was flat at 10 cents/lb.

Aromatics

**US spot MTBE prices were flat at 67 cents/gal on Thursday.

**April US methanol prices rose 4.89 cents/gal higher to 68.05 cents/gal.

**US April benzene prices closed up 3 cents Thursday at 106 cents DDP USG.

**April styrene monomer rose $15/mt to $475/mt FOB USG.

**FOB USG April and May toluene (nitn) prices rose 1 cent/gal to 93 cents/gal.

**FOB USG April and May mixed xylenes prices rose 4 cents/gal to 98 cents/gal.

**FOB USG spot paraxylene prices was flat at $505/mt.

**US spot orthoxylene prices fell 0.75 cent to 20.25 cents/lb on Thursday.

**USGC light straight-run naphtha prices fell 3.6% on the day to 33.50 to 34.75 cents/gal.

**NYMEX May RBOB prices settled at 67.73 cents/gal, down 0.07 cents.

**Latin toluene prices fell $18/mt from April 3, assessed at $233/mt FOB Brazil, while mixed xylene prices dropped $18/mt from April 3, assessed at $247/mt FOB Brazil.

**Latin benzene prices increased $2/mt from April 3, assessed at $279/mt FOB Brazil.

**US export normal butanol prices fell $30/mt to $580/mt FOB USG

**US export 2-ethylhexanol prices fell $5/mt to $720/mt FOB USG.