Podcast by

Pablo Giorgi
Global Olefins

Luka Powell
Financial & Capital Markets

Luka Powell (00:15):

Welcome to the Olefins Weekly Wrap Up. Today is Friday, January 26th, and I’m your host Luka Powell.

Pablo Giorgi (00:23):

And I’m Pablo Giorgi.

Luka Powell (00:25):

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 (00:42):

So Luka, anything interesting this week?

Luka Powell (00:45):

Well, I guess the Oscar nominations are out, but there weren’t really many surprises.

Pablo Giorgi (00:52):

Well, but you know what else has no surprises lately? The energy markets!

Luka Powell (00:58):

This week, oil demand’s up, and there were problems with supply from the arctic weather and geopoltical tensions. On January 25, US oil prices settled at $77.36 per barrel, and Brent futures hit $82.43, a 4.2% jump from the previous week. Arctic weather impacted US oil supply, dropping a million barrels a day. At the same time, US oil inventories took a nosedive by 9.2 million barrels. The market is hoping for a quick recovery.

The biggest oil field in Libya is back in action after a three-week break, but there are still issues with protests. China’s throwing money around to boost the economy, and they’re increasing crude oil imports. But conflicts in Ukraine and the Middle East are messing with oil flow. Now, in the US, a surge in heating demand last week led to 326 Billion cubic feet of gas leaving underground storage, bringing levels to just 4.6% above the five-year average.

But as we move away from the cold snap and expect warmer temperatures, natural gas prices are feeling the chill. US Henry Hub futures took a nosedive, settling at $2.189 per MMBtu on January 25, a steep 19% drop from the previous Thursday. Plus, the speedy recovery in dry gas production post-storm is adding further weight to the market.

Pablo Giorgi (02:33):

Moving to NGLs, ethane prices saw a slight increase this week, closing at 19.81 cents per gallon, up from 19.13 cents per gallon last week. This rise in ethane prices comes amid a decrease in natural gas prices. With prices hovering below 20 cents per gallon, ethane is reflecting the overall lower demand from crackers due to the winter storm and several maintenance turnarounds in this first quarter.

As of January 25, propane prices at Mont Belvieu experienced a decrease, closing at 88.13 cents per gallon, down from 92.06 cents per gallon the previous week, marking a 4.3% drop. Propane inventories fell sharply with the reduction in supply from winter storm heather coupled with strong demand. At the same time, exports last week finished at 2.019 million barrels per day, the 4th week ever when exports cross the 2 million barrels threshold. All of those weeks happened since last September.

That does it for energy, now onto ethylene.

Luka Powell (03:50):

Deals in the US spot market this week totaled 70 million pounds for January delivery and 13 million pounds for February delivery completed at the Texas and Louisiana hubs, not a very active week. Ethylene prices on a simple average basis increased, ranging between 18.5 and 20.25 cents per pound for January delivery.

Last week, Winter Storm Heather caused several operational disruptions, some of them persisting into this week. Bayport Port Arthur and CPChem Cedar Bayou are still not operational this week. An outage was reported at Formosa Point Comfort #2 unit. In addition to these outages, a heavy turnaround season that started this month should keep the inventory levels below the 5-year average in Q1 and slightly lower than December.

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

Pablo Giorgi (04:41):

The US polymer-grade propylene spot market was very quiet this week, with only 3 million pounds transacted for January delivery. The January US Gulf Coast PGP 45-day weighted-average price is 48.48 cpp, an increase of 3.80 cpp from the December 45-day weighted-average price. Week over week, PGP spot prices decreased due to lower demand.

The refinery-grade propylene spot market was quiet, with only one railcar deal recorded at 42.00 cpp. Most units that experienced outages during Winter Storm Heather last week are now back online. There are still disruptions on derivative units, with a couple of those declaring Force Majeure. That has balanced the market on the demand side.

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

Luka Powell (05:38):

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

Pablo Giorgi (05:41):

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

Luka Powell (05:54):

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.