Podcast: The Olefins Weekly Wrap Up – Episode 124
Financial & Capital Markets
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Luka Powell (00:19):
Welcome to the Olefins Weekly Wrap Up. Today is Friday, June 16th, and I’m your host Luka Powell.
Pablo Giorgi (00:26):
And I am Pablo Giorgi.
Luka Powell (00:28):
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.
Here in London, we are experiencing a heat wave our first one of the year, I think. And it’s getting very, very hot.
Pablo Giorgi (00:54):
What has the temperature been like this week? There?
Luka Powell (00:57):
The maximums during the day have been around 27 since Celsius or 81 Fahrenheit.
Pablo Giorgi (01:04):
Well, here in Houston it’s been a little bit hot. Yesterday we had 101 Fahrenheit, but it felt like 111 degrees, which is 44 Celsius. And next week the forecast calls for even hotter temperatures.
Luka Powell (01:20):
It’s definitely a lot hotter than the UK but in our defense, we don’t have any air conditioning and our homes are built to keep heat in. So those conditions would probably be unlivable in Houston.
Pablo Giorgi (01:34):
But you know what has not been hot lately? The energy markets!
Luka Powell (01:41):
On Thursday, June 15, WTI prices for July delivery settled at $70.62 per barrel. The price of petroleum futures increased compared to the previous day due to optimism over global economic growth, which also caused U.S. equity and most commodity markets to increase. Nevertheless, prices decreased against the last Thursday settlement of 71.29 per barrel. Today, there may not be much trading activity as many traders are taking off ahead of Monday’s U.S. Juneteenth holiday. In its monthly report, (OPEC) left its forecast for growth in global oil demand unchanged for 2023 at 2.3 million barrels a day. OPEC made small downward adjustments to forecast demand from countries in the Organization for Economic Cooperation and Development. which were offset by minor upward adjustments for China’s demand. OPEC expects total world oil demand in 2023 to be 101.9 mb/d.Henry Hub Natural gas closed on Thursday, June 15 at $2.53 per million Btu. FOB U.S. Gulf Coast natural gas values continued their recent rise Thursday as European natural gas prices were driven up by the reported closure of The Netherlands’ Groningen field on October 1, dashing hopes that the shutdown would be delayed to October 2024.
Pablo Giorgi (03:09):
Moving to NGLS, Purity ethane prices continue to be very stable, going from exactly 20 cents per gallon last Thursday, to 21.44 cents per gallon this Thursday. The ethane Frac spread, the difference in price between ethane and natural gas, continues at healthy levels, between 4 and 5 cents per gallon this week.
Non-TET Propane prices decreased this week from 59 cents per gallon last Thursday to 55.06 cents per gallon this Thursday. Propane price ratio to WTI crude oil weakened further to 32.7% this Thursday. Inventories in the US increased by 3 million barrels in the week ending Friday, Jun 9, according to the US Energy Information Administration, reaching 75 million barrels. Compared to last year’s numbers, inventories increased by 45.6%.
That does it for energy, now onto ethylene.
Luka Powell (04:07):
Deals in the US spot market this week totaled 60 million pounds completed at the Texas and Louisiana hubs. Ethylene prices settled at 14.00-15.875 cents per pound for June delivery.
Producers have not yet reduced operating rates, leading to rising inventory levels and a reduction of margins in the USGC. Earlier this month it was reported that the Bayport Polymers ethane cracker in Port Arthur will be out for several weeks to work on repairs and should be up and running by the end of this month. The Formosa Point Comfort mixed feed unit that went down last year due to economic reasons is expected to restart around September. Supply from the Formosa plant will likely be offset by more MEG and PVC production.
Based on estimated terminal charges and freight rates, export opportunities from the USGC to Europe and Asia were closed this week. USGC terminals will be running at less than max rates this month and next month as monomer exports slow. Freight rates continue to come down but falling prices in Europe and Asia are keeping the trade arbitrage closed.
The Ethylene forecast has changed. See the NALO for more information.
Pablo Giorgi (05:20):
The US polymer-grade propylene spot market was quiet this week, with 23 million pounds transacted for June delivery. Prices rebounded this week. After starting the reporting week at 32.25 cents per pound last Friday, prices climbed all the way to 34.75 cents per pound for a deal done yesterday. The increase in prices has been a result of additional supply constraints. Heartland polymers continues its unplanned maintenance turnaround until at least the end of the month. Enterprise had some issues restarting their Splitter IV unit. Additionally, FCCs at Baytown and Galveston Bay refineries reportedly had issues due to the heat wave in South East Texas. A few cracker issues also affected propylene availability and a metathesis unit feeds.
The forecast remains bleak, though, as none of these disruptions will be long lasting.
The propylene forecast has changed this week, see the NALO for more information.
Luka Powell (06:20):
And with that, let’s wrap up the Wrap Up.
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Pablo Giorgi (06:57):
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