Podcast: The Olefins Weekly Wrap Up – Episode 129
Financial & Capital Markets
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Luka Powell (00:13):
Welcome to The Olefins Weekly Wrap-Up. Today is Friday July 21st and I’m your host, Luka Powell.
Pablo Giorgi (00:21):
And I’m 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.
Pablo Giorgi (00:41):
So Luka, what have you been up to in the last couple of weeks?
Luka Powell (00:46):
I’ve been spending most of the summer in Canada, so I went to a Blue Jays game last week and up to Northern Toronto to the lake. So I’ve been getting the full Canadian summer experience. And you, Pablo, what’s new in your life?
Pablo Giorgi (01:04):
Well, my kids are all going back to school next week. It’s amazing how quickly this summer vacation ended.
Luka Powell (01:11):
I know. So I’ve been away for a little while and it seems like a lot has been happening. Can you give me a quick rundown on what I’ve missed?
Pablo Giorgi (01:20):
Sure. In this last few weeks, energy and feedstock prices have been increasing. WTI Crude oil went from the low 70s to the low 80s dollars per barrel. Ethane has come back down from the stratospheric levels of mid-July, and propane has been consistently increasing in price.
Luka Powell (01:41):
On Thursday, August 10, WTI settled at $82.82 per barrel. This week, the Iranian news agency “Tasnim” reported that the National Iranian Oil Company aims to boost oil production by 250,000 b/d “by the end of summer,” elevating total Iranian output to 3.5 million b/d. The U.S. oil and gas rig count continued to decline in July despite a 6% year on year increase in overall production volumes. The EIA estimates that greater well-level productivity observed in recent data will increase production throughout the rest of this year. This month, the totalrig count was roughly 730 which is down around 143 so far YTD. The Permian has accounted for a significant amount of the overall decrease, and has fallen 33 total since early April alone. Natural gas settled at $2.76 per million BTU on Thursday. US production remains at high levels, despite the reduction in the drilling rigs count which can limit production growth in an environment where demand for power generation is still very high. Record breaking exports are making headlines this week. At the same time, inventory increases was above market expectations in this weeks EIA report.
Pablo Giorgi (03:05):
Moving to NGLS, Purity ethane prices started our reporting week last Friday at 25.56 cents per gallon. Prices increased until Wednesday, when they closed at 28.06 cents per gallon. They came back down on Thursday, though, closing at 27.19 cents per gallon. Non-TET Propane prices decreased this week, from 73.38 cents per gallon last Friday to 70.375 cents per gallon this Thursday. Prices peaked last week after increasing 20 cents per gallon, or 37% since 29 June. That does it for energy, now onto ethylene.
Luka Powell (03:49):
Deals in the US spot market this week totaled 119 million pounds completed at the Texas and Louisiana hubs. Ethylene prices ranged between 17 and 17.5 cents per pound for August delivery. After a volatile summer, ethane prices have stabilised throughout August, resulting in lower ethylene cash costs. The Asia olefins forecast has been increased due to higher feedstock prices. With higher Asia prices, the arbitrage with the USGC has opened slightly, so exports to Asia may increase given elevated domestic inventories. The ethylene forecast did not change this week. See the NALO for more information . That does it for ethylene, now onto propylene.
Pablo Giorgi (04:34):
The US polymer-grade propylene spot market was moderately active this week, with 30 million pounds transacted for August delivery. Prices started the week at 31 cents per pound and finished at 30.75 cents per pound. Futures are in contango, the result of a long market. PDH margins were stable this week, after falling for the whole month of July. The refinery-grade spot market was quiet this week, with one pipeline deal recorded at 10 cents per pound and one railcar deal recorded at 26.50 cents per pound for August delivery. The August Texas RGP 45-day weighted-average price was 14.28 cents per pound, representing a decrease of 1.30 cents per pound from the July 45-day weighted-average price. Enterprise PDH 2 is increasing rates and operating well. It’s estimated to reach 100% rates by the end of August. The propylene forecast has changed this week, see the NALO for more information. And with that, let’s wrap up the Wrap Up.
Luka Powell (05:38):
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Pablo Giorgi (06:12):
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