Podcast: The Olefins Weekly Wrap Up
- Pablo Giorgi, Executive Director, Global Olefins, Chemical Market Analytics
- Luka Powell, Senior Research Analyst – Financial & Capital Markets, Chemical Market Analytics
Welcome to the Olefins Weekly wrap-up. Today is Friday, December 9th, and I’m Luka Powell.
And I’m Pablo Giorgi.
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. Reach out to our experts to know more.
So, Luka, I understand that besides working at Chemical Market Analytics, you are a talented musician. What have you been up to on your artistic side?
I actually released a new song this week called Last Time, which you can check out on all of your usual streaming platforms.
I liked the cars lyrics last time. I said it was the last time. Here we go again.
Thank you, Pablo. I’m glad you liked it, but you know what is definitely not the last time we’ll be saying this, the energy market.
WTI prices at Cushing for January delivery settled at $71 and 46 cents per barrel on December 8th, down from $81 and 22 cents per barrel from the previous Thursday. This is the lowest price since December 21st, 2021, almost 20 years ago. The market continues to be concerned about demand for next year as economic growth expectations are bearish. Last week, the Group of Seven Nations established a cap price of $60 per barrel for Russian crude oil exports. As of this Thursday, Euros crude, the main benchmark for Russian oil is at $52 per barrel, so the cap would not affect prices at this point. On the other hand, the OPEC plus meeting on Sunday decided to maintain the current levels of production quotas. This new level of prices matches the range in President Joe Biden set back in October. The administration would buy oil to replenish the strategic petroleum reserves.
That range was between $67 and $72 per barrel. Henry Hub natural gas prices settled at $5 and 96 cents per million BTU on Thursday down from $6 and 74 cents per BTU last Thursday. Even as even inventories decreased by 21 billion cubic feet or bcfs less than the previous week, 81 bcfs and keeping stocks around the middle of the five-year range. The US continues to export around 12 bcfs per day of liquified natural gas or LNG, but could be exporting more Freeport LNG plants with a capacity to export 2.1 BCFS per day shut down after a fire on June 8th and hasn’t come back since. The plant was expected to start up by mid-November, but the company said the reconstruction work was only 90% done at that time. Postponing the restart to mid-December. Moving to NGLs Mont Bellevue, ethane prices closed at 34.19 cents per gallon on December 8th, down from 41.38 cents per gallon last Thursday.
Even as prices fell natural gas prices were down even more, making the frac spread positive again. On the propane side Montbell view non TT barrel prices closed at 65.31 cents per gallon on December 8th, down around 10 cents, week over week. On Tuesday, December 6th. Propane closed at 65.75 cents per gallon, the lowest price since May of 2021. An important detail is that we are almost in the winter and this is when prices should be increasing, especially respect to crude oil, but we are still under 40% of WTI prices that does it for energy. Moving on to ethylene.
The US ethylene spot market was more active this week with deals totaling 49 million pounds completed at Texas and Louisiana hubs. Overall, ethylene prices trended lower ranging from 18 to 19.75 cents per pound for December delivery. There were no operational disruptions reported this week. While the outages at Eastman Longview, Dow Freeport, and BASF Total Port Arthur continued. As a result, the ethylene surplus persists amid weakening demand. US ethylene inventories are pegged above five year maximum level and will likely hover around these levels over the next few months. Despite slow domestic derivative demand exports are seeing the recovery we’ve been hoping for with polyethylene exports finally improving, hitting 2.1 billion pounds for the first time since January 2021. Additionally, ethylene exports reached an all-time high in October with 270 million pounds where 82% of those were going to Asia. The forecast has changed. Check out the Nalo Weekly for more information. Reach out to our experts to know more.
The polymer-grade propylene spot market was active this week with 29 million pounds recorded for December delivery. Overall, the prices decreased with deals recorded between 28 and 30 cents per pound. The December US Gulf Coast polymer grade 45-day weighted average price so far is 28.55 cents per pound. A decrease of 98 cents per pound or 0.98 cents per pound from the November 45-day weighted average price, almost 1 cent per pound less. The refinery-grade spot market was somewhat active with two pipeline deals recorded at 15.25 cents per pound for December delivery. On-purpose supply will be reduced this month as Invista’s big maintenance turnaround to change the PDHS catalyst that was originally scheduled for January was anticipated to December and is ongoing. Those types of turnarounds are done every three to five years and can take from four to five to 60 days. Invista start their turnaround as the US Gulf Coast inventory levels remained above the five-year range maximum.
Meanwhile, propylene consumption into polypropylene got a boost as Exxon started their new 450,000 metric tons per year polypropylene plant at Baton Rouge. The tightening in the market had an impact on propylene-to-propane spreads that jumped 5 cents per pound higher. Nevertheless, as propane prices continue to melt, dropping 7 cents per pound in the same period, the net result is a decline of 2 cents per pound in polymer grid prices. The polymer grid propylene price forecast has changed this week. Check out the Nalo for more information. And with that, let’s wrap up the wrap-up. Reach out to our experts to know more.
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