Luka Powell
Financial & Capital MarketsLuka Powell (00:18):

Welcome to the Olefins Weekly Wrap Up. Today is Friday, December 8th, and I’m your host Luka Powell.

Pablo Giorgi (00:25):

And I am Pablo Giorgi.

Luka Powell (00:28):

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):

Happy Hannukah to all who celebrate! What’s new in London, Luka?

Luka Powell (00:48):

Happy Hannukah! Yesterday I played at a Gala, holiday season kicking-off strong.

Pablo Giorgi (00:55):

You know what else is in holiday season? The energy markets!

Luka Powell (00:59):

This week oil prices took a bit of a nosedive. WTI front month contract dropped more than 6 dollars from the Thursday before, ending up at $69.34 per barrel. This is the first time in five months it’s gone below the $70 mark. Brent didn’t escape unscathed either, falling to $74.05, a 10% drop compared to the previous week. Why the slump? Well, people weren’t too thrilled about the new OPEC+ output cuts for the first quarter of next year, and on top of that, the outlook for oil consumption was looking pretty weak, pointing to a market driven more by a lack of demand.

Over in the US, natural gas prices were also feeling a bit down. The front-month Henry Hub futures dropped to $2.585 per MMBTU on December 7th, almost 8% less than the Thursday before. Despite a big inventory withdrawal the week before, the gas stock was still 6% higher than the five-year average.

With a ton of dry gas production and plenty of gas tucked away underground, prices hit a three-month low. Plus, the demand for heating isn’t exactly sizzling, especially with warmer-than-normal weather expected throughout December.

Pablo Giorgi (02:14):

Moving to NGLS, Mont Belvieu ethane prices slipped to 18.50 cents per gallon, a bit lower than the 20.56 cents per gallon from last week. That’s a 10.1% drop, even more significant than the fall in natural gas prices. This tells us there’s a bit of a glut in the market when it comes to ethane.

On the propane front, prices at Mont Belvieu Non-TET went up to 69.38 cents per gallon, a 2.0% rise from the previous week’s 68.00 cents per gallon. Oddly enough, while crude oil prices were taking a dive, propane prices were showing some muscle. This difference hints that the propane market is holding its own as winter approaches. By the way, US propane inventory is sitting at a five-year high.

That does it for energy, now onto ethylene.

Luka Powell (03:06):

Deals in the US spot market this week totaled 101 million pounds completed at the Texas and Louisiana hubs. Ethylene prices decreased, trading between 16.75 and 20.25 cents per pound for December delivery. This week ethane dropped below 20 cents per gallon, but because of rising LPG prices the ethylene weighted average cash cost rose versus the prior week, and although it’s still early in the month, December monthly weighted average cash costs are expected to be higher than November.

Supply of ethylene in the USGC is improving as maintenance issues that have constrained output have been resolved. The exception is Shell Deer Park, which is not expected to restart production until early next year. Operating rates are expected to significantly improve this month before falling in Q1 due to a heavy turnaround season.

Worsening conditions at the Panama Canal continue to delay deliveries and reduce export volumes, which has caused shippers to choose alternate routes. The ethylene forecast has not changed this week. See the NALO for more information.

Pablo Giorgi (04:13):

The US polymer-grade propylene spot market was active this week, with 49 million pounds transacted for December delivery. Prices rebounded going from 41.5 cpp last Friday, all the way up to 45 cpp this Thursday.

The refinery-grade propylene spot market was quiet, with two pipeline deals recorded at 11.00 cpp and one truck deal recorded at 35.00 cpp. On operations, Enterprise’s PDH-2 unit went back down again due to a fire, and it is expected to be down until early January, keeping the market tighter than anticipated. Enterprise PDH 1 and Dow Freeport PDH units have turnarounds scheduled for the late first quarter and early second quarter of 2024.

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

Luka Powell (05:09):

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

Pablo Giorgi (05:12):

Join us at the Global Plastics Summit from February 27 to 29 in Houston, Texas. Come see leading global experts discuss pivotal impacts and initiatives shaping the plastics industry.

Luka Powell (05:28):

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.

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