Podcast: The Olefins Weekly Wrap Up
Financial & Capital Markets
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Luka Powell (00:14): Welcome to the Olefins Weekly wrap-up. Today is Friday, February 17th, and I’m your host Luka Powell.
Pablo Giorgi (00:22): And I am Pablo Giorgi.
Luka Powell (00:26): 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 (00:43): In Texas, we are officially back to the office part-time.
Luka Powell (00:46): How is your commute going, Pablo?
Pablo Giorgi (00:49): Every day is a surprise. Depending on the time I leave home, it can take from 20 to 45 minutes to get to the office. It takes a while to adjust. Do you know what else takes a while to adjust? The energy market.
Luka Powell (01:05): WTI Prices at Cushing for March delivery settled at $78.49 per barrel on February 16th, rising by 43 cents from the previous Thursday. Furthermore, the storage build of 16.3 million barrels was significantly higher than expected. Cushing showed a 600,000 barrel increase with the bulk of the build coming from the Gulf Coast. The EIA reported on Wednesday that renewable diesel production in November 2022 averaged 113,000 barrels per day, a 51% increase from November of 2021. This growth is forecast to continue and remain higher than biodiesel production, which is likely to decrease. Biodiesel is a product of the reaction of vegetable oils with methanol and can be blended with diesel in small proportions as it is different properties. Renewable diesel, on the other hand, is a result of the hydrogenation of vegetable oils and is chemically identical to fossil diesel. The Russian announcement to cut oil production by 500,000 barrels a day or 5% of total production did not have any impact on the market this week. Natural gas prices for March, closed at around $2.4 million BTU this Thursday.
Luka Powell (02:25): Discussions this week suggest that the Freeport LNG facility start date is getting closer. On Monday, it was announced that Freeport had restarted one of its three liquefaction trains. Pipeline flows to the plant increased this week to the highest level since the June 2022 plant shutdown. Moving to NGLs Mont Belvieu, ethane prices on Thursday averaged at 24.87 cents per gallon, a decline of around 1 cent per gallon from last Thursday. While prices are cheap, we’re seeing a positive frac spread with respect to natural gas reflecting the additional demand for petrochemicals. On the propane side, on Thursday, non-TET prices in Mont Bellevue settled at 82.87 cents per gallon, a decrease of 2.60 cents per gallon. Propane stocks decreased this week from 68.9 million barrels to 66.3 million barrels. It is still much higher during the same week last year when they were at 41.9 million barrels. These inventories represent almost 49 days of supply. When a year ago we were at 20 days. Domestic demand continues to be low for February due to milder winter weather while exports for the week ending February 10th, averaged 1.845 million barrels per day, an all-time record. That does it for energy. Moving on to ethylene.
Pablo Giorgi (03:55): The US ethylene spot market was not as active this week with deals totaling 69 million pounds at the Texas and Louisiana hubs. Ethylene prices trended higher this week, ranging from 18.75 to 23 cents per pound for February delivery. The Bay Port Polymers, a Port Arthur plant, remains offline as a result of Winter Storm Elliot. The Shell Deer Park plant impacted by the tornado that hit East Houston on January 24 is expected to restart soon. ExxonMobil’s Baytown mixed feed cracker is currently offline for plant maintenance and is expected to restart at the end of this month or the beginning of next month. Inventory levels are slightly above the five-year average, but are expected to come down. The ethylene forecast changed this week, see the NALO for more information. The polymer-grade Propylene spot market continues to be quiet, with volumes totaling 21 million pounds for February delivery.
Pablo Giorgi (04:54): Prices continue to increase this week, going from 51 cents per pound last week to 52 cents per pound earlier this week, and then coming back down to 50.5 cents per pound as of this Thursday. The February 45-day weighted average price was 47.73 cents per pound this week, an increase of six point 28 cents per pound from the January 45-day weighted average price. The refinery grade spot market was not active again this week, with no deals recorded. Supply was again the culprit for the high prices. Enterprises PDH came back up during the weekend, but restrictions at other units, particularly FCCs undergoing maintenance turnarounds or at low rates limited supply. In the meantime, maintenance continues at Invista’s PDH unit. The Propylene forecast has changed. See the NALOl for more information. And with that, let’s wrap up the wrap up.
Luka Powell (05:56): Join us in San Antonio at the AFPM International Petrochemical Conference from March 26th to March 28th. Visit our hospitality suite, salon D at the Marriott River Center Hotel and attend our chemical market seminar on March 26th from one to 3:00 PM at the Salon I at the same hotel. Join us next week where we are joined by the Circular plastics team to discuss the disruptive truths of plastic recycling. Don’t forget to subscribe to our podcast on SoundCloud, Spotify, or wherever you get your podcasts, and give us a like or leave a review if you enjoy it. If you have any questions or want to cover something more specific, you can send us an email. Until next time.
Are you attending AFPM IPC? Join us at our Chemical Market Seminar: Conquering Market Turbulence on Sunday, 26 March 2023 from 1 PM – 3 PM Central Time at the Marriott Rivercenter Hotel. Our thought leaders will provide an in-depth overview of the challenges and future opportunities for the Olefins and Polyolefins, Aromatics, Inorganics, and Syngas sectors.
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