Podcast by

Pablo Giorgi
Global Olefins

Luka Powell
Financial & Capital Markets

Luka Powell (00:14):

Welcome to the Olefins Weekly Wrap Up. Today is Friday, February 16th, and I’m your host Luka Powell.

Pablo Giorgi (00:21):

And I. I’m Pablo Georgi.

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.

Pablo Giorgi (00:39):

This week, it was Carnival week in Brazil, Mardi Gras in the US, the beginning of Lent for many Christians around the world.

Luka Powell (00:48):

And importantly, it was Pancake Day in the UK!

Pablo Giorgi (00:53):

Pancake Day.

Luka Powell (00:55):

Yep. So on Tuesday, February 13th, it’s Tuesday and known as Pancake Day.

Pablo Giorgi (01:03):

Interesting. And did you get a lot of pancakes?

Luka Powell (01:06):

I definitely did. I hosted a dinner party, as I always do every year and had pancakes for dinner. So it’s, it’s up there as one of my favorite days of the year.

Pablo Giorgi (01:15):

Well, pancakes were flipping across the pond.

Luka Powell (01:18):

But you know what else is flipping? The energy markets!

WTI crude futures rose 2.4% to $78.03 per barrel, and ICE Brent was up 1.5% at $82.86 per barrel on February 15. The economic outlook for the US and Europe in 2024 is looking up, thanks to easing inflation and potential interest rate reductions, which could boost oil demand. However, Red Sea tensions have disrupted Europe’s crude supply, forcing many tankers to take longer, costlier routes. On the home front, US oil output has stabilized after winter storm Heather, but refinery runs have hit multi-year lows, impacting the tight distillate market.

US natural gas prices hit a low, with NYMEX Henry Hub futures dropping 17.5% to $1.58 per MMBtu on February 15, the lowest since June 2020. EIA inventory stats showed a smaller-than-expected 49 Bcf stock withdrawal for the week ending February 9, pushing stocks above the five-year maximum mark. With associated gas production likely to continue driving up total output, the market outlook remains bearish.

Pablo Giorgi (02:37):

Moving to NGLs, Ethane prices dipped to 17.38 cents per gallon, down from 19.50 cents per gallon last week, following a significant drop in natural gas prices. The Mont Belvieu ethane frac spread narrowed to 9.51 cents per gallon. Propane prices at Mont Belvieu rose to 94.75 cents per gallon from 91.38 cents per gallon the previous week, in line with rising crude oil prices. As we approach spring, prices are expected to weaken. The freight rate from Houston to Chiba increased to $95 per ton, and wait times at the Panama Canal have remained below 5 days, smoothing the flow of propane. Inventories at Mont Belvieu remain close to the 5-year average.

That does it for energy, now onto ethylene.

Luka Powell (03:30):

The week was moderately active for ethylene spot deals, which totaled 92 million pounds completed at the Texas and Louisiana hubs. Ethylene prices on a simple average basis decreased, ranging between 19 and 19.875 cents per pound for February delivery. Ethylene supply along the Gulf Coast is still slightly tight this week, as we are in the middle of a heavy turnaround season that started in the beginning of January and will continue until early April.

The American Chemistry Council preliminary data shows that polyethylene domestic production and operating rates decreased in January due to the outages caused by Winter Storm Heather. The latest trade data for December reported a significant drop in ethylene exports, a 61% decrease compared to November, reflecting the impact of the Panama and Suez Canal issues on global freight, as well as the ethylene oversupply in Asia.

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

Pablo Giorgi (04:32):

The US polymer-grade propylene spot market was also moderately active this week, with 21 million pounds transacted for February delivery. Prices started the week at 54 cents per pound, then decreased to 52 cents per pound. The refinery-grade propylene spot market had three pipeline deals recorded at 11.50 cpp. Enterprise Mont Belvieu still has one rgp splitter down since winter storm Heather, while their PDH 1 restarted at the end of this week.

A turnaround at Dow’s Freeport PDH unit began early February, while Enterprise has its PDH 1 turnaround scheduled for early March.

The propylene forecast has not changed this week. See the NALO for more information.

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

Luka Powell (05:20):

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.

Pablo Giorgi (05:32):

And don’t forget to subscribe to our podcast on SoundCloud, Spotify, apple, or Google Podcasts or wherever you get your podcasts. And give us a like or leave a review if you enjoy it. And if you have questions or want us to cover something more specific, you can send us an email. Until next time.

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