Podcast by

Pablo Giorgi
Global Olefins

Luka Powell
Financial & Capital Markets

Luka Powell (00:20):

Welcome to the Olefins Weekly Wrap Up. Today is Friday, January 12th, and I’m your host Luka Powell.

Pablo Giorgi (00:27):

And I am Pablo Giorgi.

Luka Powell (00:30):

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.

Happy New Year to all of our listeners. We hope everyone enjoyed the holiday season. We have a big year ahead with elections being held in a lot of countries, geopolitical turmoil and economic woes.

Pablo Giorgi (00:58):

Absolutely. A new year brings new changes, but you know what else is always changing? The energy markets!

Luka Powell (01:07):

On January 11, the NYMEX WTI crude futures closed slightly lower at $72.02 per barrel, while Brent concluded at $77.41 per barrel with a minor decline of $0.18. The market sentiment leans towards bearishness, influenced by Saudi Arabia’s decision to reduce the February price of its Arab light crude to Asia, despite ongoing supply disruptions in Libya and geopolitical tensions in the Middle East, including a hijacked oil tanker in the Gulf of Oman.

On the US side, 1.3 million barrels of crude entered US commercial storage, along with 8.0 million barrels of gasoline and 6.5 million barrels of distillates. Inventory builds position refined product inventories near the five-year average, reflecting persistent demand concerns.

Henry Hub’s future prices surged nearly 10% to $3.097 per MMBtu on 11 January due to colder weather forecasts. North America anticipates a temperature drop this week, especially in the central US.

However, factors like the prospect of warmer temperatures later in January and resilient US dry gas production limit further price spikes. Europe experienced a 6.9% drop in TTF prices, settling at $9.924 per MMBtu on 11 January, driven by high storage levels ensuring sufficient supply during colder days.

Pablo Giorgi (02:47):

Moving to NGLs, Ethane prices experienced a notable increase, closing at 23.50 cents per gallon on 11 January, up 19.0% from last week, aligning with the rise in natural gas prices. Saudi Arabia’s decision to increase its ethane price also contributes to the global economic conditions.

As of 11 January, propane prices at Mont Belvieu rose significantly to 79.63 cents per gallon, marking a substantial 15.5% increase from the previous week. This rise coincides with stable crude oil prices and precedes an arctic front in North America. The current healthy inventory levels mitigate potential short-term disruptions due to the weather, but logistical challenges persist with restrictions in the Panama Canal and congestion from vessel attacks in the Red Sea.

That does it for energy, now onto ethylene.

Luka Powell (03:50):

Deals in the US spot market this week totaled 115 million pounds at the Texas and Louisiana hubs. Ethylene prices increased, settling at 18.375-19.5 cents per pound for January delivery. Ethylene spot market activity increased, as the year gets rolling.

Ethylene demand is not expected to improve much over H2 2023. Spot prices rose steadily with ethane, and the ethane forecast is expected to increase further throughout 2024.

The ethylene forecast has not changed this week, see the NALO for more information.

Pablo Giorgi (04:28):

The US polymer-grade propylene spot market saw mild activity, with 40 million pounds transacted for January delivery. The January US Gulf Coast PGP 45-day weighted-average price increased to 46.78 cpp. The propylene market remains tight in January, despite Enterprise PDH units both up.

The main news of the week is Dow’s Freeport PDH turnaround being moved up to February, prompting additional demand in January. Cold weather is expected along the US Gulf Coast next week, operational issues are not expected at this point, but it’s worth keeping an eye on it.

The propylene forecast has changed this week. See the NALO for more information.

Luka Powell (05:17):

And with that, let’s wrap up the Wrap Up.

Pablo Giorgi (05:21):

Join us at the Global Plastics Summit from February 27 to 29 in Houston, Texas. Come see leading global experts discuss pivotal impacts and initiatives shaping the plastics industry.

Luka Powell (05:36):

And don’t forget to subscribe to our podcast on SoundCloud, Spotify, Apple, or Google Podcasts, 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 more specific, you can send us an email. Until next time.

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