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US spot ethylene hits record low of 13.50 cents/lb on supply length

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Platts Jet Fuel

US spot ethylene hits record low of 13.50 cents/lb on supply length

Houston — US spot ethylene hit a record low Wednesday, assessed at 13.25-13.75cents/lb FD USG, amid a glut in supply.

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Prompt-month ethylene was heard traded at 13.5 cents/lb Mont Belvieu-Novabasis by the close of the assessment. The market opened the day traded at14.25 cents/lb MtB-Nova.

The assessment is the lowest since S&P Global Platts began assessing spotethylene markets in the US Gulf Coast in July 2004.

Prior to this month, the previous all-time low assessment was 15.375cents/lb on December 4, 2008, according to S&P Global Platts data.

The previous record low came amid plummeting sales and margins resultingfrom the global financial crisis, which resulted in reduced run rates, plantshutdowns and layoffs across the USG region.

However, Wednesday's low trade stems from significantly different marketdynamics.

Fueled by the shale gas boom in North America, the US ethylene marketstands to see a more-than 35% increase in production capacity by 2019.

More than 3.5 million mt/year of new capacity has been added in the last12 months, with players including Ingleside -- a joint venture betweenOccidental Chemicals and Mexichem -- DowDuPont, and Chevron Phillips Chemicalstarting new crackers in Texas.

Another 4 million mt/year of new ethylene capacity is slated to comeonline this year, with more expansions slated for 2019 and beyond.

North America's ethylene production during the next decade is expected toclimb from approximately 33.7 million mt in 2017 to nearly 48.65 million mt in2026, according to estimates from S&P Global Platts Analytics.

--Nida Qureshi, nida.qureshi@spglobal.com

--Bernardo Fallas, bernardo.fallas@spglobal.com

--Edited by Derek Sands, derek.sands@spglobal.com