We focus on ethylene price trends today, as we discuss it’s movement and related ethane tightness in today's daily report – more operating ethylene capacity means more ethylene (depressing prices) but it also means more ethane demand, inflating its price. Margins remain robust, even with the feedstock increase and the price decline and it is important to remember that any decline in US ethylene prices would be stopped at a level that allowed increased exports, which would still be well above US costs. With the full ethylene fleet operating in the US, there is a surplus (i.e. more ethylene than there is consuming capacity) so we expect export economics to drive spot pricing under “normal” circumstances. Abnormal production outages over the last year have seen that export surplus come and go a couple of times and the price volatility the Exhibit below shows that.
