HOUSTON (ICIS)–US August contract prices are not expected to settle this month as the market surveys disruptions stemming from Hurricane Harvey, sources said on Thursday and Friday.
July ethylene contract prices were at 29.25 cents/lb, and some are expecting a double-month settlement for August and September.
Hurricane Harvey made landfall on 25 August on the Texas coast near Corpus Christi. The storm remained in the area for several days as it weakened into a tropical storm and caused extensive flooding, notably around Houston and along the Texas-Louisiana border.
The portion of the US Gulf along the Texas and Louisiana coasts is home to multiple petrochemical complexes. ICIS estimated that about 47% of US ethylene capacity was affected by the storm. Both upstream and downstream capacity and shipping and logistical systems were affected as well.
While some companies have begun to restart units, others continue to assess some sites and units.
Amid the disruptions, August ethylene contract negotiations have been hampered and have not yet been agreed. Sources expect the settlement will be delayed until talks for September, when both months would be settled.
US ethylene contract prices are typically settled at the start of a month for the prior month, but delays and double-month settlements have happened in the past. In 2015, April contracts were settled as part of an April-May double-month settlement.
Prior to the disruptions from Harvey, August ethylene contracts had been expected to increase 1-2 cents/lb on due to higher spot prices.
Front-month ethylene spot trades in August ranged 20.125-26.250 cents/lb, compared to 17.000-21.000 cents/lb in July.
US ethylene spot prices this week were steady to higher as prices climbed late in the week following disruptions from Hurricane Harvey on the US Gulf.
US ethylene spot prices were assessed at 29.50-30.25 cents/lb, compared to 29.50 cents/lb in the previous week.
Major US ethylene producers include ExxonMobil, INEOS, LyondellBasell and Shell Chemical.
Major US buyers include Occidental Chemical and Westlake Chemical.
Pictured above is a stop sign floating in the flood waters caused by Hurricane Harvey in Houston, Texas. Photo credit: John Glaser/CSM/REX/Shutterstock