Podcast by

Pablo Giorgi
Global Olefins

Kathy Hall
Executive Director, PetroChem Wire by OPIS

Pablo Giorgi (00:16):

Welcome to the Olefins Weekly Wrap Up. Today’s Friday, April 12th. And I’m Pablo Giorgi.

Kathy Hall (00:23):

I’m Kathy Hall.

Pablo Giorgi (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.

Kathy Hall (00:43):

So Pablo, you had plans to watch the solar eclipse here in the US last Monday. Did you see it?

Pablo Giorgi (00:50):

I did plan to take a day trip to go see in Austin where it would be a total eclipse, but the weather was cloudy and rainy, so I decided to stay in Houston. So for us it was like the Shakespeare play, Much Ado About Nothing.

Kathy Hall (01:06):

Yeah, it was much the same for me in New Jersey. You know, it’s funny to think for hundreds of years that phrase Much Ado About Nothing has been around, it’s one that just conveys so much in just a few words.

Pablo Giorgi (01:19):

Yeah, indeed. Even people back in the 16th century knew the feeling that we still describe today. And that is also a phrase that I think we can use to describe the markets this week, isn’t it?

Kathy Hall (01:31):

Very true. The markets always have a certain amount of hype and speculation surrounding them, but some weeks, it’s just a bit quiet. But you know what else has been quiet this week?

Pablo Giorgi (01:45):

The energy markets!

Pablo Giorgi (01:48):

Yesterday, NYMEX WTI futures settled at $85.02 per barrel down 1.4% versus one week ago. Brent Auto settled down around 1% in the week closing at $89.74 cents per barrel this Thursday. OPEC is expected to maintain production cuts due to uncertain demand, despite positive short-term indicators. March saw OPEC’s output at 26.6 million barrels per day with Iraq slightly over its quota. Supply constraints are anticipated from export cuts in Mexico, pipeline developments in Canada, and possible sanctions on Venezuela, which could tighten heavy crude supplies as fuel demand rising rises, pressuring US product inventories and crack spreads, the difference between the price of fuels and the price of crude oil. Russia’s refining capacity reduction may lead to increased gasoline imports from Belarus and Kazakhstan, potentially necessitating further output cuts.

Pablo Giorgi (02:53):

On natural gas, Henry Hub front-month futures priced dipped slightly from last week, settling at $1.764/MMBtu on Thursday. The persistent low prices indicate excessive supply in the market. Lower 48, also known as the continental US gas storage saw a mild injection of 24 billion cubic feet last week. Despite the near-term weakness, a steep rise in prices for the winter period was reflected in the forward curve with prices averaging $3.45/MMBtu between November of this year and February of 2025, double of what is today’s price level.

Kathy Hall (03:40):

Thanks. Over in the NGL markets, I feel like when markets have no strong drivers like news, they tend to quietly follow the energy markets, and that was true this week. We saw the non-TET propane price drop from 85 cents a gallon last Friday to about 78.5 cents by Thursday and May propane was just a hair above April, pricing at slightly above 79 cents. Meanwhile, ethane spent the week bouncing around between 19 and 19.75 cents before ultimately easing back to 19.25 cents per gallon by the end of the closing market yesterday for April. But like propane, May pricing was quite close to April, ending at just 19.38 cents on Thursday. Now remember at these prices, ethane is about 6.5 cents per pound. So that’s still quite decent when you’re looking at the cost to produce ethylene. And speaking of ethylene, what was the story there this week?

Pablo Giorgi (04:43):

Thank you, Kathy. The week was moderately active for ethylene spot deals with 69 million pounds completed at the Texas Louisiana hubs. Prices were up this week ranging between 19.25 and 21.75 cents per pound for April delivery. Spot prices have trended up again with Choctaw prices in Louisiana, flat and Mon Bellevue prices here in Texas increasing, which has narrowed the gap between the two hubs. Feedstock prices for propane and butane were down this week, but ethane prices have rebounded to their highest levels since the end of February. Despite the not-so-pronounced movement this week on operations, there is only one remaining first quarter cracker turnaround still ongoing, which is expected to restart next week with the additional supply. Inventory levels should increase from the five-year minimum seen in February to near the five-year maximum by the end of the second quarter with no additional maintenance turnarounds in this quarter. Operating rates are expected to average above the mid 80s and effective rates close to 90%. Latest trade data for February reported very good exports of ethylene and derivatives and derivatives were even stronger than ethylene, with polyethylene reporting its highest per month ever. The ethylene focus forecast has changed this week. See the NALO for more information.

Kathy Hall (06:21):

Wow, the US polymer grade propylene market was active, but it was largely range bound for April in the 42-43 cents per pound range. The drama of March is now in the rear view mirror, but the effect of the month over month delta is still a bit staggering As of yesterday, the calendar average price for April PGP, which is a simple average of the daily closing price, was 42.74 cents. That’s down nearly 13 cents per pound from the March final calendar average of 55.606 cents. As we’ve noted previously, the runup in the prompt price was attributed to supply side issues while demand was not particularly strong. But that said, the forward markets for PGP remain relatively close in price to the front-month these days with four Q trading about 0.5 Cent below April this week. So even with the lower prices, propylenemargins still remain decent.

Kathy Hall (07:30):

Propane at 78.5 Cents is roughly 18 cents per pound. And good old refinery grade propylene continued trading the pipeline at 12.5 Cents. So the cost for both PDH units and the splitters were still fairly low, but as we know in the propylene market, life can change fast. But for now, we’re waiting to see if PGP has found stability. With no news on the horizon and the stability we’ve seen in the forward markets though, we could be watching a more modern play.. So be sure that you know the latest propylene forecast by Chemical Market Analytics. Check out your own NALO report. With that, let’s wrap up the Wrap Up.

Pablo Giorgi (08:18):

And don’t forget to subscribe to our podcast on SoundCloud, Spotify, Apple, or Google Podcasts or whenever you get your podcasts and give us a like or leave a review if you enjoy it. And if you have questions or want us to cover something more specific, you can send us an email. Until next time.