Podcast by

Pablo Giorgi
Global Olefins

Luka Powell
Financial & Capital Markets
Luka Powell (00:03):

Welcome to the Olefins Weekly Wrap Up. Today is Friday, November 3rd, and I’m your host Luka Powell.

Pablo Giorgi (00:27):

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):

Happy belated Halloween, Luka. What was Halloween in London like?

Luka Powell (00:51):

We actually had quite a lot of trick or treaters this year, which I was quite surprised by. There was probably around a hundred kids, so I had to restock the candy bowl a couple of times.

Pablo Giorgi (01:04):

Wow. But you know where else there is restocking? The energy markets!

Luka Powell (01:09):

On 2 November, WTI settled at $82.46 per barrel, a 0.9% decline from last Thursday, with the market now shifting its focus to financial markets. Despite the anticipated pause in interest rate hikes by the Federal Reserve and the Bank of England this week, its impact was minimal, as these developments had already been priced into the market. One major uncertainty is whether OPEC+ will extend voluntary production cuts into the next year if the demand picture continues to deteriorate. US crude oil inventories saw a modest increase of 0.8 million barrels last week, while diesel stocks decreased for the fifth consecutive week.

In natural gas, Henry Hub December futures settled on November 2, at $3.47 per MMBtu. The updated weather forecast indicates temperatures returning to above-normal levels in early to mid-November, curbing gas demand for heating purposes. According to the EIA, storage increased by 79 bcf for the week ending October 27, aligning with market consensus. Currently, working gas inventories are 6% above the five-year average and 8% higher than last year at this time

Pablo Giorgi (02:25):

Moving to NGLS, Purity ethane prices in Mont Belvieu settled at 25.81 cents per gallon this Thursday, relatively stable since last week. The ethane frac spread against natural gas weakened this week and remained just under 3 cents per gallon for the whole week. It continues to be a story of low demand from crackers. Between the planned and unplanned outages, operating rates are still around 80%, reducing demand and prices for ethane.

Non-TET propane settled at 65.38 cents per gallon on Thursday, a slight increase of 1.36% from the previous Thursday. Inventories remain at a 5-year high ahead of the winter season. The export market’s dominance over domestic demand continues to determine propane pricing. Asian petrochemical demand plays a pivotal role in setting US propane prices.

That does it for energy, now onto ethylene.

Luka Powell (03:22):

Deals in the US spot market this week totaled 108 million pounds completed at the Texas and Louisiana hubs. Ethylene prices on a simple average basis decreased, ranging between 18-21.5 cents per pound for November delivery. The ethylene market in the USGC continues to be dominated by a series of outages that have reduced available capacity over the last two months. Most of these outages are expected to be resolved by December, but a new round of planned maintenance will begin in Q1 2024, which will keep operating rates constrained until Q2 2024.

Spot prices trended down this week, while ethylene weighted average cash costs remained fairly stable. The October ethylene Net Transaction Contract price settled today down 0.5 cpp from the September reference price. There has been no significant change to domestic demand in the third quarter and exports are beginning to soften given higher competition and weak global demand.

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

Pablo Giorgi (04:27):

The polymer-grade propylene spot market was quiet this week, with 16 million pounds transacted for October delivery and none for November delivery. Inventories continue to be very low. Prices were relatively stable starting at 46 cents per pound last Thursday, up to 46.5 cents per pound this Thursday. BASF TotalEnergies’ metathesis unit at Port Arthur is in restart mode and Enterprise Mont Belvieu’s PDH-2 is expected to come back online by mid-November.

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 (05:11):

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!

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