Podcast by

Pablo Giorgi
Global Olefins

Luka Powell
Financial & Capital Markets

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You can also read the transcript of this week’s podcast below.

Luka Powell (00:13):

Welcome to the Olefins Weekly wrap up. Today is Friday, March 10th, and I’m your host Luka Powell.

Pablo Giorgi (00:21):

And I am Pablo Giorgi.

Luka Powell (00:25):

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 (00:42):

Happy belated International Women’s Day Luka, both to you and our listeners. Did you have the chance to celebrate it?

Luka Powell (00:50):

Thank you, Pablo. I did celebrate. I attended an event for women in the energy industry. It was an amazing night and was very well attended despite the snow and very cold weather we’re having at the moment.

Pablo Giorgi (01:04):

Snow in London in March?

Luka Powell (01:08):

I know. It’s definitely a shock to the system as we’re just getting used to the warmer weather, but the weather here in the UK is always full of surprises. Do you know what else is often full of surprises? The energy markets.

Pablo Giorgi (01:23):

WTI prices at Cushing for April delivery settled at $75.72 cents per barrel on March 9th, down from $78.16 cents per barrel on March 2nd. Inventory is decreased by 1.7 million barrels this week. After 10 weeks of inventory buildup, refineries operated 86% capacity, relatively stable stopping the downward trend.

Luka Powell (01:50):

On Thursday, Henry Hub physical prices for delivery Friday rose 0.2% to $2.50/MMBtu, while Henry Hub futures for April and May fell 0.3% and 1.1% respectively to $2.54/MMBtu and $2.68/MMBtu respectively.

On Tuesday, the EIA cut its 2023 price forecast for US natural gas. Its forecast that the US will see the lowest demand first quarter consumption of natural gas in five years. It was also forecast that US natural gas prices will likely average $3.02 per million BTU this year, a decrease of 11.2% from the February forecast.

Moving to NGLs, Mont Belvieu ethane prices on Thursday averaged at 25.44 cents per gallon. This week at the 13th annual OPIS NGL Summit, our own Carlo Barasa spoke with some of the leading industry experts

For ethane, the key question is whether we’ll be exporting ethane as such or in the form of ethylene and its derivatives. On the propane side, on Thursday Non-T-E-T prices in Mont Belvieu settled at 83 cents per gallon, a decrease of just over 6 cents per gallon from the previous week.

Although NGL supply from gas and oil production is currently going strong, demand both locally and internationally, particularly to Asia, will continue to grow. Asia is currently cracking around a hundred thousand barrels a day of LPGs with a total flexibility capacity of around 700,000 barrels a day/

That does it for energy. Moving on to ethylene.

Pablo Giorgi (03:30):

The US ethylene spot market was a bit more active this week, with deals totaling 91 million pounds at the Texas and Louisiana hubs. Ethylene prices trended slightly lower this week, settling at 19.5 to 22 cents per pound for March delivery. Ethylene continues to trade at a lower end of the range in Louisiana and at the higher end of the range at the Texas hubs. However, the spread is starting to narrow.

The Bayport Polymers Port Arthur ethane cracker remains offline because of Winter Storm Elliott but is expected to restart later this month. ExxonMobil’s Baytown mixed feed cracker extended its planned maintenance turnaround. The plant is expected to restart by the end of next week. Formosa’s Point Comfort’s mixed-feed unit has been down for several months now and is expected to restart in the early-to-mid second quarter. Spot export opportunities to Asia and Europe are open, and as a result, exports of ethylene monomer are expected to increase this month. Domestic demand is expected to improve with the restart of the INEOS La Porte PE plant last week, the startup of the Bayport Polymers PE plant in May, and the startup of the Next Wave Energy Partners’ ethylene-to-alkylate plant later in the year.

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

Luka Powell (04:54):

U.S. Gulf Coast polymer grade propylene prices continue their wild rally, last week reaching prices that had not been seen since early April of last year. Last week, the market had large intraday price movements, a rare occurrence in the PGP market, with only three other months in recent history experiencing this anomaly. Prices rose again this week, reaching 82 cents per pound on a deal done on Wednesday for dated delivery.

The US polymer-grade propylene spot market was very quiet this week, with 11 million pounds transacted for March delivery. The refinery-grade propylene spot market was also quiet, with no deals recorded for March delivery.

On-purpose supply is still tight due to ongoing maintenance at Invista’s PDH unit. The unit was going through restart procedures on Thursday.

Steam cracker propylene availability should remain flat in March, due in large part to a few cracker outages and turnarounds. Additional propylene production by crackers due to the use of heavier feeds will be limited. The underlying domestic demand across the propylene value chains remains bearish, although PP rates continue to increase month over month. The spot market is very thin, with sellers only letting go of product at a very steep price. Nevertheless, recent plant startups are ramping up, such as Exxon PP and LyondellBasel POTBA.

The propylene forecast has changed, see the NALO for more information.

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

Pablo Giorgi (06:28):

Join us in San Antonio at the AFPM International Petrochemical Conference from March 26th to 28th. Visit our Hospitality Suite, Salon D, at the Marriot Rivercenter Hotel, and attend our Chemical Market Seminar, on March 26 from 1 to 3 pm, at the Salon I on the same hotel.

Luka Powell (06:55):

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. 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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