Podcast: The Olefins Weekly Wrap Up – Episode 126
Financial & Capital Markets
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Luka Powell (00:14):
Welcome to The Olefins Weekly Wrap-Up. Today is Friday July 7th and I’m your host, Luka Powell.
Pablo Giorgi (00:21):
And I’m Pablo Giorgi.
Luka Powell (00:23):
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.
Luka Powell (00:37):
Happy Belated 4th of July! Did you do anything special for the holiday?
Pablo Giorgi (00:45):
The usual, hamburgers, fireworks, and watching the hotdog eating contest!
Luka Powell (00:51):
A hotdog eating contest is hilarious. Who won and how many hotdogs did they eat?
Pablo Giorgi (00:57):
Joey Chestnut won for the 16th time. He ate 62 hot dogs in 10 minutes. His record and the world record is 76 hotdogs in 10 minutes, and he set it back in 2021.
Luka Powell (01:11):
That’s very impressive. 76 hotdogs sounds absolutely crazy.
Pablo Giorgi (01:17):
Well, you know what else is 76? The price of Brent in the energy markets!
Luka Powell (01:23):
On Thursday, July 6th, Brent crude oil closed at $ 76.70 per barrel in the Intercontinental Exchange, or ICE. WTI settled at $71.80 per barrel. There is not much going on in terms of news and the prices continue to be relatively stable.
Natural gas settled at $2.61 per million btu on Thursday. Prices have come down since last Friday, when prices settled at $2.77 per million btu, as demand for power generation has subsided at the end of the heat wave in the US.
The latest EIA weekly data showed gasoline demand for the week ended Friday rose to its highest level since October 2021, however still lower than pre-COVID levels.
Pablo Giorgi (02:10):
Moving to NGLS, Purity ethane prices increased this week, going from 25.75 cents per gallon last Thursday to 26.44 cents per gallon this Thursday.
Non-TET Propane prices were relatively stable this week, going from 53.63 cents per gallon last Thursday to 53.50 cents per gallon this Thursday. Propane price ratio to WTI crude oil continues to slowly approach 30%, and is now at 31%, as of this Thursday.
The weekly EIA propane stocks report showed a smaller-than-projected increase. Inventories rose by 1.57 million barrels to 81.12 million barrels in the week ending June 30. Days of inventory were reduced from 111.3 to 104.9 days.
That does it for energy, now onto ethylene.
Luka Powell (03:02):
Deals in the US spot market this week totaled 58 million pounds completed at the Texas and Louisiana hubs. Ethylene prices on a simple average basis decreased, settling at 14.98-16.38 cents per pound (cpp) for July delivery. Producers are continuing to have high effective operating rates as long as margins remain positive. The spot margin for weighted-average feedstocks is expected to average around over 3.00 cents per pound this month. Therefore, we expect producers to keep operating rates high, leading to rising inventory levels and a reduction of margins in the US Gulf Coast.
The restart of the Formosa Point Comfort mixed feed unit that went down last year remains dependent on improving market conditions. Inventory levels for this month are estimated to be slightly higher than the five-year average.
Domestic demand for ethylene remains sluggish now, but new demand entering the market will reduce the surplus. However, even with the ethane feedstock advantage in the long run, US exports of monomer and derivatives will be challenged as the global market is over supplied as demand is bearish and new capacities are being added at record levels.
The ethylene forecast changed this week. See the NALO for more information.
That does it for ethylene, now onto propylene.
Pablo Giorgi (04:22):
The US polymer-grade propylene spot market was quiet this week, with 24 million pounds transacted for July delivery. Prices increased slightly this week, reaching 34.13 cents per pound on Wednesday, the last physical deal done.
The July 45-day weighted-average price is now 34.58 cents per pound. Enterprise products reported an issue on 2 units of the RGP splitter 3 on July 2nd. Despite the temporary reduction in supply, contributing to higher prices this week, a lot of supply is still coming to the market.
Heartland Polymers PDH unit and Phillips 66 FCC should both be fully back this month.
Enterprise is also about to start up their new PDH unit with a capacity to produce 750 thousand metric tons of propylene per year.
The propylene forecast has not changed this week, see the NALO for more information.
Luka Powell (05:17):
And with that, let’s wrap up the Wrap Up.
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Pablo Giorgi (05:54):
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