Luka Powell
Financial & Capital Markets

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Luka Powell (00:20):

Welcome to the Olefins Weekly Wrap Up. Today is Friday, August 18th, and I’m your host, Luka Powell.

Pablo Giorgi (00:28):

And I’m Pablo Giorgi.

Luka Powell (00:30):

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 (00:46):

This week, I dropped off my older kid at college, my teenage daughter is driving, everything is changing! But you know what is not changing? The energy markets!

Luka Powell (00:58):

On Thursday, August 17, WTI settled at $80.39 per barrel. Prices remaining at and above the $80 mark could lead to concerns regarding Chinese demand. According to China’s National Bureau of Statistics China processed a record-high 14.7 million barrels per day of crude oil in the first half of this year. Russia has become the largest exporter to china, supplying 15% of chinas crude oil imports and increasing 400,000 barrels a day versus last year the largest increase of all countries.

However, on a percentage basis the US had the biggest increase at 124% or 200,000 barrels a day increase. China likely increased imports from the United States because of favorable prices compared to the Middle East. This week, the total rig count dropped to 722, the lowest number in 18 months, and a considerable drop from where the year started at 866.

Henry Hub natural gas settled at $2.62 per million BTU on Thursday. Despite the continued warm weather in the US and Europe, and the additional demand for electricity, prices remain stable. This is in large part due to the oversupplied market.

Pablo Giorgi (02:18):

Moving to NGLS, Purity ethane prices were stable, starting our reporting week last Friday at 25.56 cents per gallon, then ending the reporting week this Thursday at 26.81 cents per gallon.

Non-TET Propane prices decreased more drastically this week, from 68.63 cents per gallon last Friday to 61.94 cents per gallon this Thursday. Propane prices came back to levels not seen since before mid-July.

That does it for energy, now onto ethylene.

Luka Powell (02:54):

The US spot market was very quiet this week, with 40 million pounds worth of deals completed at the Texas and Louisiana hubs. Ethylene prices were relatively stable this week, ranging between 17-17.25 cents per pound for August delivery.

Ethane prices remained stable again this week, while LPG prices trended significantly lower compared to last week. As a result, the ethylene weighted average production cash cost continues to decline after peaking in the third week in July.

Ethylene spot prices, on the other hand, have been trending upwards in August but remained flat this week. Revised AFPM data reported that Q2 2023 ethylene production was the highest ever, increasing nearly 9% versus the first quarter and reporting the highest operating rate since Q2 2022.

The ethylene forecast did not change this week. See the NALO for more information. That does it for ethylene, now onto propylene.

Pablo Giorgi (03:56):

The US polymer-grade propylene spot market was moderately active again this week, with 33 million pounds transacted for August delivery. Prices started the week at 30.75 cents per pound and finished at 32 cents per pound. The small increase doesn’t tell the whole story, due to the falling propane prices this week which boosted PDH margins.

The refinery-grade spot market was active this week, with 95.5 thousand barrels done. The weekly weighted average refinery grade price was 17.72 cents per pound. Several operational issues curtailed propylene production this week, leading to a tightening market.

The BASF/Total cracker in Port Arthur had a blip this week. Three PDHs went down for several days: Invista, Enterprise PDHs 1 and 2.

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

Luka Powell (04:59):

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

Pablo Giorgi (05:02):

Join us for the first World Chemical Forum, in Houston on September 12 to 14. In cooperation with The Wall Street Journal, Barron’s and Factiva, hear from your trusted leading industry experts and industry leaders. Understand how energy and chemical markets are evolving into a fourth historical industrial and social revolution with Infinite Possibilities. Get in-depth insights on geopolitics, climate concerns, shifting trade balances and disruptive technologies; and how that is transforming culture, socioeconomics, and market paradigms.

Luka Powell (05:40):

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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