Luka Powell
Financial & Capital Markets

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You can also read the transcript of this week’s podcast below.

Luka Powell (00:14):

Well to the Olefins Weekly wrap up. Today is Friday, March 3rd, and I’m your host Luka Powell.

Pablo Giorgi (00:22):

And I am Pablo Giorgi.

Luka Powell (00:24):

And together as Chemical Market Analytics, we recap the top events moving the ethylene and propylene markets over the past week. The design of this podcast is to complement the content from the North America Light Olefins Weekly service, otherwise known as the NALO Weekly. So Pablo, anything new and interesting going on in Houston?

Pablo Giorgi (00:49):

Yes, this past week the Houston Rodeo started.

Luka Powell (00:53):

There is definitely nothing like that in London. What, what is it about, what do you do?

Pablo Giorgi (00:59):

The Houston Rodeo is the largest in the world. It takes place from February 28th to March 19, this year, last year more than 2.4 million people attended at they, and they have donated more than $575m to youth education since its beginning in 1932.

Luka Powell (01:19):

That’s actually really impressive. Are you going to attend?

Pablo Giorgi (01:24):

Yes, I’ll take my family to the livestock show, carnival, rodeo. And finally, the live concert. Tonight, we’re attending and The Chainsmokers are going to play.

Luka Powell (01:34):

Okay, so it’s like quite a big deal then.

Pablo Giorgi (01:38):

The Rodeo is a huge deal in Houston. It mobilizes the entire city. The Friday before the Rodeo starts, kids and grownups alike go dressed as cowboys to class or to work. It’s called the Go Texan Day. If you are wondering, I might or might not have dressed up as a cowboy. But you know what else is big in Houston? The energy markets!

Luka Powell (02:04):

WTI prices at Cushing for April delivery settled at $78.16 per barrel on March 2^nd. For the 10th consecutive week, there’s been another build in US storage, including the NYMEX delivery hub in Cushing. Inventories are in line with the five-year maximum representing 32 days of supply.

Comparatively, last year in the same week, there was 27 days of supply.

As a result, prices are relatively stable, but Asian demand and record high US exports support the current level of prices. The EIA reported on Wednesday that imports of Russian diesel to Europe have fallen to 18,000 barrels a day from an average of 389,000 barrels a day from October 2021 to September 2022. However, imports from the Middle East and Asia have made up for this loss. As a result, the market is no longer concerned about lack of availability of diesel and prices have gone down.

Pablo Giorgi (03:07):

Natural gas prices for April closed at around $2.76 per million. BTU this Thursday up from $2.40 per BTU last Thursday. Freeport NG has successfully restarted two of their Liquefaction trains and is on track to restart the last one. The company is ramping up to produce 2 billion cubic feet per day of LNG and is expected to return to its full capacity of 2.38 billion cubic feet per day in May.

Domestic demand is expected to increase in the next couple of weeks with a colder weather forecast for much of the US. The EIA reported inventory draw was slightly above expectations with 81 billion cubic feet taken from the inventories. Stocks are still above the five-year average though.

Moving to NGLs, Mont Belvieu ethane prices on Thursday averaged 24.81 cents per gallon, flat from last Thursday. The ethane frack spread decreased through the week as natural gas prices increased, but did not push ethane prices up.

On the propane side – on Thursday, Non-T-E-T barrels in Mont Belvieu settled at 89.19 cents per gallon, an increase of almost 7 cents per gallon from the previous week. Propane stocks decreased this week from 63.3 million barrels to 60.6 million barrels, still much higher than the same week last year when they were at 37 million barrels.

These inventories represent almost 44 days of supply when a year ago we were at 20 days. Domestic demand is forecast to increase in the next couple of weeks due to colder weather.

That does it for energy! Moving on to ethylene.

Luka Powell (04:55):

The US ethylene spot market was not as active this week with deals totaling 70 million pounds at the Texas and Louisiana hubs.

Ethylene prices trended slightly higher this week, ranging from 18.25 to 23.50 cents per pound for March delivery. Ethylene continues to trade at the lower end of the range at the Louisiana hub and at the higher end of the range at the Texas hubs resulting in a wide price spread. The Bayport Polymers Port Arthur plant is still offline following the fallout from the winter storm Elliot.

ExxonMobil’s Baytown mixed feed cracker is restarting from their plant maintenance. Infantry levels are slightly above the five-year average but are expected to come down throughout the first quarter.

Domestic demand will improve within the next couple of months for a couple of reasons. Firstly, we have the restart of the INEOS LA Porte polyethylene plant in March. Then in April we have the startup of the Next Wave Energy Partners’ ethylene-to-alkylate plant in Pasadena, Texas. And finally, we have the startup of the Bayport Polymers polyethylene plant in May. The ethylene forecast did not change this week. See the NALO for more information.

Pablo Giorgi (06:15):

The polymer grade propylene spot market continues to be very quiet. The last physical deal was done on February 22nd and nothing since. One paper deal was done this Thursday at 71 cents per pound, unthinkable territory until very recently.

The refinery rates spot market was not active again this week with no deals recorded. Supply continues to be very tight and there’s virtually no product available for spot sales. Invista’s PDH continues down for maintenance as well as several other units. On a positive note, ExxonMobil’s mixed feed cracker seems to be coming back from maintenance.

The propylene forecast has changed, see the NALO for more information. And with that, let’s wrap up the wrap up.

Luka Powell (07:03):

Join me in San Antonio at the AFPM International Petrochemical Conference from March 26th to 28th. Visit our Hospitality Suite, Salon D, at the Marriot Rivercenter Hotel, and attend our Chemical Market Seminar, on March 26 from 1 to 3 pm, at the Salon I on the same hotel.

Don’t forget to subscribe to our podcast on SoundCloud, Spotify, or wherever you get your podcasts, and give us a like or leave a review if you enjoy it. If you have any questions or if you’d like us to cover something a little bit more specific, you can send us an email. Until next time.

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