Podcast by

Pablo Giorgi
Global Olefins

Luka Powell
Financial & Capital Markets

Luka Powell (00:16):

Welcome to the Olefins Weekly Wrap Up. Today is Friday, May 3rd, and I’m your host Luka Powell.

Pablo Giorgi (00:23):

And I am 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 (00:41):

So Luka, yesterday my son had his Little League semi-final game.

Luka Powell (00:47):

That’s very exciting. How did they do? Did they win?

Pablo Giorgi (00:50):

Well unfortunately, they did not but they went very far in the season, the game could’ve gone either way, and we are all very proud of the boys!

Luka Powell (01:10):

May the 4th be with you. May’s a pretty good month for puns.

Pablo Giorgi (01:16):

Indeed, but you know what else is good for puns? The energy markets.

Luka Powell (01:21):

The oil market witnessed a significant downturn this week, with Brent oil futures falling 6% to $83.67 per barrel, and NYMEX WTI futures dropping 5.5% to $78.95 per barrel. This shift marks the first time WTI has dipped below $80 in seven weeks. The sell-off was driven by persistent high interest rates and a surprising increase in crude inventories. The EIA reported a substantial increase in crude stockpiles by 7.3 MMbbl, coupled with a reduction in refinery inputs.

As we move into the second and third quarters of 2024, the crude market is expected to face deficits due to heightened refinery activity and external pressures such as renewed sanctions on Venezuela and Iran, and slower production in the Americas. The upcoming OPEC+ meeting on June 1st will be pivotal, with expectations that the group will continue to tighten output rather than roll back cuts.

Turning to natural gas, Henry Hub stays Steady. Henry Hub prices increased to $2.035 per MMBtu. Despite production curtailments, US associated gas production has stayed strong. Storage injections continue, with levels exceeding both last year’s figures and the five-year average. The anticipated return of Freeport LNG export facility to full capacity is expected to support Henry Hub prices due to increased demand for feedgas.

Pablo Giorgi (02:57):

Moving to NGLs, ethane prices decreased by 5.92%, closing at 17.81 cents per gallon this Thursday, contrasting with an increase in natural gas prices at Henry Hub. Ethane remains well supplied, despite the increased domestic and export demand.

This week, Mont Belvieu propane prices saw a notable decrease of 7.27%, dropping from 76.44 cents per gallon to 70.88 cents per gallon. This significant drop aligns with recent forecasts and is indicative of seasonal trends and inventory adjustments within the market. Meanwhile, WTI crude oil prices also fell by 6%, a sharper decline in propane prices relative to crude oil.

That does it for NGLs, moving to olefins!

Luka Powell (03:52):

The US spot market for ethylene was active, with 103 million pounds transacted for April, May and July delivery. Prices settled between 19.38-20.25 cpp for May delivery, with the weighted-average price slightly increasing this week. The market anticipates tighter than previously expected inventory in Q2 due to a couple of turnarounds and an unplanned cracker outage, leading to a near-term spot forecast increase.

March trade data revealed a 78% increase in US ethylene exports, with a notable shift from Europe back to Asia and India. This change could have significant implications for global supply chains and market strategies in the coming months.

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

Pablo Giorgi (04:44):

In the propylene spot market, activity was subdued for polymer-grade with only 12 million pounds transacted for April delivery, and no deals for May. The April US Gulf Coast PGP 45-day weighted-average price settled at 42.21 cents per pound, reflecting a significant decrease from March. The refinery-grade spot market was more active this week, with transactions recorded at 39.00 cpp for rail and 34.00 cpp for truck deliveries in May, as well as a couple of pipeline deals at 12.5 cents per pound for May delivery.

On operations, Enterprise’s PDH1 turnaround continues, and is expected to last at least one more week. PDH2 is still in need of maintenance to be able to run at its full potential, and it seems like this will happen in June, and might take from one to two months to get the work done. Dow’s PDH unit in Freeport had an unplanned outage last weekend, and was bringing the unit back up in the middle of this week.

In Canada, Heartland Polymers’ PDH unit is undergoing a two-month turnaround, affecting supply until mid to end of May. A potential rail workers strike in Canada in the end of May can disrupt industry operations. The propylene forecast has changed this week, see the NALO for more information.

Luka Powell (06:11):

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

Pablo Giorgi (06:15):

Join us on September 9th to 11 in Houston, Texas for the World Chemical Forum, the most influential chemical industry event this year. Don’t miss out on insight from world renowned experts and industry leaders exploring the future of chemicals amidst the energy transition and big oil investment in chemicals. Contact us for more information, including early bird discounts.

Luka Powell (06:43):

Don’t forget to subscribe to our podcast on SoundCloud, Spotify, apple, 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 we want us to cover something more specific, you can send us an email. Until next time.