Podcast by

Pablo Giorgi
Global Olefin

Luka Powell
Financial & Capital Markets

Luka Powell (00:16):

Welcome to the Olefins Weekly Wrap Up. Today is Friday, December 22nd, and I’m your host Luca Powell.

Pablo Giorgi (00:24):

And I’m Pablo Giorgi.

Luka Powell (00:26):

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. So today is our last podcast of the year. Next week we’re all gonna be reflecting on the chemical rollercoaster. That was 2023. What a ride.

Pablo Giorgi (00:53):

Absolutely. This year we’ve seen it all. And as we bid farewell to this chemical saga, we want to express our gratitude to our amazing listeners. You’ve made this podcast a catalyst for thought, and we appreciate every molecule of your support.

Luka Powell (01:08):

And speaking of gratitude, we’re sending a shout-out to all the incredible guests who’ve shed their wisdom and insights. You’ve made our chemistry even more potent.

Pablo Giorgi (01:18):

And before we wrap up, remember to stay tuned for next year’s episodes – more insights, more banter, and who knows, maybe a surprise chemical reaction or two.

Luka Powell (01:29):

From our podcasting lab to yours, wishing you a fantastic year-end celebration and an even more exciting year ahead. Happy holidays, chemical colleagues!

Pablo Giorgi (01:39):

But you know what else can’t wait to celebrate the holidays? The energy markets!

Luka Powell (01:44):

So, the oil market had a comeback, breaking a seven-week losing streak. Prices went up, not because of any major fundamental changes, but as a result of some shipping chaos in the Red Sea. Brent futures climbed around $2.78 to $79.39 per barrel, and WTI futures went up by $2.31 to $73.89 per barrel on December 21. However, the announcement that Angola is leaving OPEC led to concerns over OPEC+ unity.

Meanwhile, the US is doing its own thing, hitting 13.3 million barrels a day in production. Uncertainty still looms over the oil market due to the future of OPEC+ , oversupply, and demand worries. The Henry Hub price nudged up to $2.572 per MMBTU on December 21. Due to comfortable underground gas storage levels and healthy domestic gas production. US storage is healthy at 3,577 Bcf, 7.4% above the five-year average. Despite turbulence in the Red Sea , TTF and Asia spot LNG prices took a dip. Looks like the demand in major regions is just not kicking in.

Pablo Giorgi (03:05):

Moving to NGLs, Mont Belvieu ethane prices took a nosedive to 18.12 cents per gallon this week, marking a 7.1% drop from the 19.50 cents per gallon we saw last week. Ethane prices are taking a hit, even with natural gas going up. This is due to less demand for ethane cracking.

Now, onto propane. Mont Belvieu Non-TET saw a slight uptick in propane prices, closing at 68.00 cents per gallon, a 1.5% increase from the previous 67.00 cents per gallon. This move, however, doesn’t quite dance to the same beat as crude oil prices, which made a more noticeable jump. The Panama Canal is playing its part, limiting daily vessel traffic to 18 and stacking up a queue of 73 vessels. Add recent Red Sea issues and Suez Canal woes, and you’ve got a recipe for more market hiccups.

That does it for energy, now onto ethylene.

Luka Powell (04:04):

Deals in the US spot market this week totaled 63 million pounds completed at the Texas and Louisiana hubs. Ethylene prices on a simple average basis decreased, ranging between 17 and 17.88 cents per pound for December delivery. Ethylene spot transactions were subdued this week ahead of the Christmas Holiday next week with transaction volumes lower than last week.

Spot prices were flat this week, while the ethylene weighted average production cash costs were up slightly versus the prior week. On operations, other than a minor outage from CPChem and the ongoing issues with Shell Deer Park, steam crackers are running well, and this month should see an improvement in operating rates versus the past several months, which have been constrained by numerous outages. This will improve inventory levels ahead of a heavy turnaround season in Q1 2024.

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

Pablo Giorgi (05:00):

The US polymer-grade propylene spot market was active this week, with 53 million pounds transacted for December delivery. The December US Gulf Coast PGP 45-day weighted-average price is 44.94 cpp, a decrease of 0.87 cpp from the November 45-day weighted-average price. The refinery-grade propylene spot market was quiet, with one railcar deal recorded at 40 cpp. Supply remains tight following the ongoing outage at Enterprise Mont Belvieu’s PDH-2 unit and a short operational disruption this week at their PDH-1 unit. Both units are expected to be back up over the weekend.

Dow and Enterprise PDH 1 units have turnarounds scheduled for the late first quarter of 2024. On-purpose supply reliability is struggling, contributing to the volatile market sentiment. The Shell Chemical plant in Deer Park, TX, appears to be on track to restart early next year following the fire that occurred on May 4th.

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

Luka Powell (06:12):

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

Pablo Giorgi (06:16):

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

Luka Powell (06:30):

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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