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 April 19, and I’m your host, Luka Powell.

Pablo Giorgi (00:12):

And I’m Pablo Giorgi.

Luka Powell (00:15):

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 (00:31):

So Luka, what’s new this week?

Luka Powell (00:34):

Well, big news today. There’s a new Taylor Swift album that came out.

Pablo Giorgi (00:40):

Yeah. And I heard there was a big surprise about it.

Luka Powell (00:45):

Yeah, it’s a double album, so there’s I think 30 tracks, but don’t get me started on it. Otherwise I will derail this entire podcast.

Pablo Giorgi (00:55):

Yeah. Well, you can’t complain about Ms. Swift being boring. She’s always full of surprises for her fans. She’s in constant change.

Luka Powell (01:04):

Same old, same old. The only thing that is constant is change.

Pablo Giorgi (01:09):

Well, there’s two things I hold as constant for the energy markets. The first one is that all energy comes from the sun, and the second one is that the bull always wins.

Luka Powell (01:22):

But you know where the bull has not won this week?

Pablo Giorgi (01:25):

In the energy markets!

Luka Powell (01:28):

The oil market’s response to the ‘unprecedented’ Iranian attack on Israel last weekend was unprecedented—prices fell consecutively over the last four days. ICE Brent closed at $87.11 per barrel on April 18, marking a nearly 3% drop from the previous Thursday, while NYMEX WTI futures decreased by 2.7%, settling at $82.73 per barrel. The U.S. House overwhelmingly passed the Iran-China Energy Sanctions Act late Monday, which aims to expand sanctions on Iran by requiring annual reviews to assess Chinese financial institutions’ involvement in transactions with Iranian oil. These intensified sanctions could jeopardize Iran’s export of 1.4 MMb/d. Iran is not the sole focus of renewed sanctions this week. The U.S. has decided to reimpose sanctions on Venezuela after a six-month hiatus, citing the Maduro government’s failure to conduct a fair election. This action puts 150,000 barrels per day of heavy crude at risk in a market already facing shortages for heavy crude, exacerbated by a reduction in Mexico’s crude exports.

Luka Powell (02:43):

Over the past week, Henry Hub front-month futures prices experienced another slight decrease, settling at $1.757 per MMBtu on April 18. Despite supplies being robust, though reduced from winter levels, and gas storage levels remaining higher than average, upward movement was hindered. Lower 48 gas storage saw a second 50 Bcf injection last week, resulting in the inventory overhang decreasing to 36% above the five-year average from 39% the previous week. Furthermore, the ongoing Freeport LNG outage redirected feedgas flows back into the domestic market. Production from two trains at Freeport LNG is expected to rise soon, with full operational capacity anticipated for all three trains by month-end.

Pablo Giorgi (03:32):

Moving over to the NGL markets, purity ethane prices remained stable this week from at around 19.25 cents per gallon, despite the slight dip in natural gas prices, increasing the frac spread, the difference between ethane and natural gas prices, as demand from ethylene crackers continues to come back in the USGC. April non-TET propane prices fell this week, closing this Thursday at 77.25 cents per gallon, down 2% from last week. The decrease was less steep than crude oil price decreases this week, though, and propane might catch up to crude in the next days. That’s it for NGLs, now onto ethylene.

Luka Powell (04:20):

The week was moderately active for ethylene spot deals, with 78 million pounds completed at the Texas and Louisiana hubs. Prices increased again, ranging between 19.25 and 22 cents per pound for April delivery. The divergence between Texas and Louisiana prices continues, with Choctaw prices increasing due to short supply in that hub. Ethane and propane feedstock prices are down this week, leading to a decrease in the weekly ethylene weighted average production cash cost. On operations, The Nova Geismar cracker is expected to come back up this week from its maintenance turnaround, while the Sasol cracker that had a fire in Louisiana is not expected to be back this year. The ethylene forecast has not changed this week, see the NALO for more information.

Pablo Giorgi (05:08):

The US polymer grade propylene spot market was active this week, with 48 million pounds transacted for April delivery. Price remained relatively stable, declining slightly to just under 42 cents per pound. The April US Gulf Coast PGP 45-day weighted-average price is now 42.41, a decrease of just a bit more than 11 cents per pound from the March 45-day weighted-average price. The refinery-grade propylene spot market was somewhat active, with deals recorded at 12.50 cpp and 39.00 cpp, for pipeline and railcar delivery respectively, both for April delivery. The propylene market remains long due to several derivative production outages, moderating demand. Despite most of those outages being expected to be over in the next week or so, Enterprise’s PDH1 is also coming back from its maintenance turnaround, increasing supply to the market. The propylene forecast has changed this week, see the NALO for more information.

Luka Powell (06:14):

Don’t forget to subscribe to our podcast on SoundCloud, Spotify, Apple, 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.