Podcast: The Olefins Weekly Wrap Up
Financial & Capital Markets
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Luka Powell (00:13):
Welcome to the Olefins Weekly wrap-up. Today is Friday, January 27th, and I’m your host Luka Powell.
Pablo Giorgi (00:21):
And I am Pablo Giorgi.
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 weekend little league baseball practices start again. Now it’s for the spring season and I was hoping to stay home and watch the Australian Open Finals and the NFL playoffs, but it’s all for the best as my son loves it and has a lot of fun doing it, and I’m happy if he’s happy. I guess the break is over.
Luka Powell (01:02):
But you know what doesn’t take a break, the energy markets.
Pablo Giorgi (01:06):
WTI prices at Cushing for February delivery settled at $81 and 1 cents per barrel on January 26th. Relatively stable with respect to the previous Thursday when it settled at $80 and 33 cents per barrel. The EIA report released this Wednesday showed both inventories and production unchanged from the previous week. Henry Hub natural gas prices for February delivery settled at $2 and 94 cents per million BTU on Thursday. It’s the first time prices settled under $3 per million BTU since May of 2021. Gas production continues at near record high levels while warmer-than-average temperatures mean winter demand is lower than usual. Freeport LNG export terminal has been granted authorization to begin the restart process. It’s a long process that begins with cooling down the pipes, which should take around 11 days. Additional authorization to restart operations is necessary after this initial step is successful.
Pablo Giorgi (02:09):
According to the U.S. Federal Energy Regulatory Commission (FERC), production is not expected to be back in February. Moving to NGLs Mont Belvieu ethane prices averaged 25 points 13 cents per gallon on January 26th, relatively flat from last week. As natural gas prices have decreased the ethane FRAC spread increased to around 5.50 cents per gallon. On the propane side, Mont Belvieu non-TT barrel prices average 93.875 cents per gallon on January 26. Prices continue to increase at a faster pace than crude oil reaching 49% of WTI crude oil price this Thursday. Despite the increase, it is still low seasonally for the winter. Exports remain at almost record-high levels at around 1.5 million barrels per day. That does it for energy, moving on to ethylene.
Luka Powell (03:02):
The US ethylene spot market was active this week with deals totaling 73 million pounds, slightly quieter than last week. Ethylene prices were volatile, ranging from 18.5 to 27 cents per pound for January delivery and 22 cents per pound for February. Delivery margins on a weighted average basis were relatively stable this week. Nearly all steam crackers impacted by winter storm Elliot have now restarted. Only Bayport remains offline as a result of the freeze. Inventory levels are now estimated to be within the five-year average due to the loss of supply from the winter storm. This week, several units experienced power outages due to severe weather with high winds and tornadoes that passed through an industrial area on the east side of Houston. Several petrochemical units were impacted. We know that INEOS declared force majure due to the tornado touching down on their plant. Ethylene supply will not be impacted as most outages were with downstream units, which experienced power outages and major damage to the plants.
Luka Powell (04:07):
Ethylene suppliers were higher than demand as prices went down following the storm. Export opportunities to Asia this week remain closed due to decreases in Northeast Asian prices amid the Lunar New Year holidays. The ethylene forecast did not change this week. See the NALO for more information. The polymer-grade propylene spot market was somewhat active this week with volumes totaling 23 million pounds for January delivery. Overall, the prices trended lower going from the low fifties to the high forties. The refinery-grade propylene spot market was somewhat active with one rail card deal recorded for January delivery at 29 cents per pound. Enterprise Mont Belvieu’s PDH unit restarted this week, which should help with purpose supply while maintenance at Invista is ongoing. Monomer consumption of polypropylene is relatively low. Most non-polypropylene derivatives are also struggling with weak domestic demand and monomer consumption should be low. The Propylene forecast has not changed. See the NALO for more information.
Pablo Giorgi (05:11):
And with that, let’s wrap up the wrap-up.
Luka Powell (05:15):
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 would like us to cover something more specific, you can email us. Until next time.
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