USGC ethane prices rise 8 cents/gal on demand, short covering: trade

Chemical News: USGC ethane prices rise 8 cents/gal on demand, short covering: trade

https://www.chemnet.com Apr 27,2011 Platts
Mont Belvieu purity ethane prices surged 8 cents/gal Monday, boosted by strong demand from the chemical sector and short covering ahead of April expiration, according to trade sources.

Platts assessed purity ethane for April at 89.25 cents/gal, up 8 cents from Thursday. Purity ethane prices had not reached that high since September 10, 2008, when it was assessed at 89.75 cents/gal, according to Platts data.

Buyers were taken aback by the price surge, and suggested a trader had likely been caught short and needed to buy to cover April positions.

"You would think they would learn; otherwise they may be comfortable with these [price swings]," a chemical producer said.

Ethane demand from the petrochemical sector through March was strong, and looking forward, demand is expected to remain healthy.

"Sources suggest ethane demand tracked a healthy [950,000-960,000 b/d] through March, and we expect that level could increase to [960,000-970,000 b/d] through April," according to an analyst report from Raymond James and Associates.

Steam cracker operating rates are approaching about 93-94% thus far through April, the report said.

Downstream, spot ethylene resisted the upward pressure to start the week, with April assessed flat at 64.50 cents/lb MtB Williams and May product heard done lower at 63.75 cents/lb.

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