Podcast by

Pablo Giorgi
Global Olefins

Luka Powell
Financial & Capital Markets
Luka Powell (00:14):

Welcome to the Olefins Weekly Wrap Up. Today is Friday, October 27th, and I’m your host Luka Powell.

Pablo Giorgi (00:20):

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 (00:38):

I’m back after a couple of weeks away from the podcast.

Luka Powell (00:42):

Welcome back. I’m sure you missed it.

Pablo Giorgi (00:45):

I missed doing the podcast with you Luka, but you know what else I missed? The energy markets!

Luka Powell (00:52):

Oil prices declined from last Thursday due to global economic concerns, impacting equity markets and signaling potential decreased oil demand. WTI dropped nearly 7% to settle at $83.21 per barrel on Thursday.

Worries persist about geopolitical unrest affecting oil prices. Speculation surrounds possible U.S. sanctions on Iran’s oil exports amid the ongoing middle east conflict, risking Iran’s growing crude output.

In the U.S., the oil stockpile grew by 1.2 million barrels last week, and refining utilization decline suggests ongoing maintenance. Yet, tight distillate supply is expected to sustain robust refining operations.

Pablo Giorgi (01:35):

Moving to NGLS, Purity ethane prices in Mont Belvieu settled at 24.75 cents per gallon this Thursday, relatively stable but trending slightly down since last week, hovering around 25 to 26 cents per gallon, and down against previous weeks.

The ethane frac spread against natural gas continues to be low and is now at 3.5 cents per gallon. The main reason for the weakness in ethane prices is the reduction in demand from crackers. Between the planned and unplanned outages, operating rates are now around 80%, reducing demand and prices for ethane.

Non-TET propane settled at 64.25 cents per gallon on Thursday, a decrease of more than 5 cents week-over-week. Propane continues to be weak, on the consensus of a mild winter in the North of the country, with that, the 5 year high inventories will allow us to go through even with some colder than expected events with no problem.

At the same time, US exports can’t load the barrels fast enough due to congestion and low draft at the Panama Canal. The last time propane was below 35% of WTI in the heating months was late 2015.

That does it for energy, now onto ethylene.

Luka Powell (02:59):

Deals in the US spot market were more active this week with transactions totaling 127 million pounds completed at the Texas and Louisiana hubs, however most of the volume was for November delivery.

Weekly ethylene prices on a simple average basis decreased, ranging between 19.75-22.25 cents per pound for October delivery. Ethylene supply in the USGC continues to be short as heavy turnarounds are expected to persist until December with another round of outages in the first quarter of 2024. Estimated October operating rates hover below 80% with similar rates expected for November, which has led to a substantial reduction in ethylene inventory.

Of the major outages, NOVA Corunna and BASF Total are expected to be back up in November with Shell Deer Park back in December. Additionally, ethylene exports were up more than 20% in August, which has further decreased inventories. Derivative demand has been steady to lower, but exports of ethylene derivatives have also increased. Lower feedstock prices have decreased the ethylene weighted average cash cost to the lowest level since June. The gap between ethane and butane production costs has also narrowed to less than 1.0 cpp.

The ethylene forecast has changed this week. See the NALO for more information.

Pablo Giorgi (04:18):

The polymer-grade propylene spot market was slow this week, with 21 million pounds transacted for October delivery, as it continues to be hard to find product with inventories being very low. Prices were relatively stable starting at 46 cents per pound last Thursday, down to 45.25 cents per pound for most of this week and back to 46 cents per pound this Thursday.

The refinery-grade spot market was also inactive, with only one pipeline deal recorded at 10 cents per pound. The October Texas RGP 45-day weighted-average price is now 17.87 cents per pound, representing an increase of 2.22 cpp from the September 45-day weighted-average price. Propylene is tight with the continued outages at BASF Total Petrochemicals, Shell Deer Park and Enterprise PDH 2.

This week, Invista’s PDH had an operational upset and shut down on Wednesday, 25 October. Enterprise’s PDH 2 is forecast to restart next week. Inventories are already very low due to several outages among propylene producers in August and September.

The propylene forecast has not 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 (05:41):

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.

Save the date for next year’s World Chemical Forum on September 9-11, 2024 in Houston!