Podcast: The Olefins Weekly Wrap Up – Episode 136
Podcast by
Pablo Giorgi
Global Olefins
Luka Powell
Financial & Capital Markets
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Luka Powell (00:03):
Welcome to The Olefins Weekly Wrap Up. Today is Friday October 6, and I’m your host, Luka Powell.
Pablo Giorgi (00:24):
And I am Pablo Giorgi.
Luka Powell (00:27):
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 (00:44):
It’s finally rainy in Houston. We have a cold wave heading this week, something we haven’t seen in months.
Luka Powell (00:51):
Well, in London we have a heat wave coming this weekend, which is very odd for this time of year. Also, I’m heading to the NFL game this Sunday in London to watch the Bills play the Jaguars, so it feels like we’ve kind of swapped lives this weekend, Pablo.
Pablo Giorgi (01:07):
All a bit weird, but you know what else is weird and turbulent? The energy markets!
Luka Powell (01:14):
WTI settled at 82.31$ per barrel on Thursday October 5, a correction of around $10 per barrel compared to the highs of last Thursday. This is largely due to demand concerns despite Saudi Arabia and Russia early this week both confirming that they would extend the supply cuts until the end of the year. Furthermore, there is a considerable build in US gasoline inventories, although US commercial crude saw another modest withdrawal of 2.2 million barrels (MMbbl).
Henry Hub natural gas settled at 3.16 $ per million BTU on Thursday October 5, following cooler weather which has increased the demand for heating . This marks a 7.5% increase from last Thursday and is the highest level since the end of January. The continental US storage has continued to expand, with an injection of 86 billion cubic feet (Bcf) during the last week of September.
Pablo Giorgi (02:11):
Moving to NGLS, Purity ethane prices in Mont Belvieu settled at 28.63cents per gallon this Thursday, up almost 2 cents per gallon against last week. The ethane frac spread against natural gas increased a couple of cents during the week but is now back to just under 8 cents per gallon, same level as the end of last week.
Non-TET propane settled at 68.13 cents per gallon on Thursday, a decrease of almost 5 cents week-over-week. Propane decreased less than crude oil, though, and it is now at 34.7% of the price of WTI crude oil.
That does it for energy, now onto ethylene.
Luka Powell (02:53):
Deals in the US spot market this week totaled 111 million pounds completed at the Texas and Louisiana hubs. Ethylene prices ranged between 20.75 -22.5 cents per pound (cpp) for October delivery. Ethylene supply in North America has become tighter, given a high number of plant outages. BASF Total, Shell Deer Park, and NOVA Corunna remain down due to unplanned outages, while Oxy and CpChem have planned turnarounds this month. These outages have reduced estimated operating rates to around 80% and are forecast to quickly lower inventories to within their 5-year range.
USGC spot margins remain low given increased feedstock prices, and prices are expected to increase in the short term to support margins. Demand has been improving in the second half of 2023 but renewed recessionary fears have diminished market optimism.
The ethylene forecast hasn’t changed this week. See the NALO for more information.
Pablo Giorgi (03:57):
The US polymer-grade propylene spot market was active this week, with 28 million pounds transacted for September delivery. Prices increased rapidly last Friday, reaching 43 cents per pound, then decreasing and reaching around 40 cents per pound this Thursday. The October US Gulf Coast PGP 45-day weighted-average price was 39.83 cents per pound, an increase of 2.30 cents per pound from the September 45-day weighted-average price. October refinery-grade was done at 10 cents per pound in a pipeline deal this week. No railcar deals were recorded this week. The October Texas RGP 45-day weighted-average price was 25.29 cents per pound, representing an increase of 9.64 cents per pound from the September 45-day weighted-average price. On operations, the BASF Total cracker and metathesis remains down, as well as Shell’s Deer Park Mixed Feed Cracker.
The propylene forecast hasn’t changed this week, see the NALO for more information.
And with that, let’s wrap up the Wrap Up. Come see us at APLA in Sao Paulo from November 11 to 14.
Luka Powell (05:15):
And don’t forget to subscribe to our podcast on SoundCloud, Spotify, apple, or Google Podcasts 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 if you’d like us to cover something more specific, you can send us an email. Until next time.