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, May 10th, and I’m your host Luca Powell.

Pablo Giorgi (00:22):

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 (00:40):

In the US, It’s Mother’s Day on Sunday .

Luka Powell (00:45):

In the UK, we actually had Mother’s Day in March, but happy early Mother’s Day to all of the mothers!

Pablo Giorgi (00:52):

Happy Mother’s Day. Luka, are you doing anything special this weekend?

Luka Powell (00:57):

I’m actually going to be playing golf tomorrow for the first time, which will be interesting.

Pablo Giorgi (01:03):

Nice.Everybody is into golf now with the new Netflix Series! My wife watched it and is starting to play as well. Have fun!

Luka Powell (01:12):

Thank you. I’m not sure how good I will be, but I’ll be out celebrating my boyfriend’s birthday with some friends, so it’ll definitely be fun

Pablo Giorgi (01:23):

And don’t forget to work on your golf swing.

Luka Powell (01:26):

But you know what else swings?

Pablo Giorgi (01:28):

The energy markets?

Luka Powell (01:30):

This week, the oil market has stabilized amid shifting geopolitical landscapes and economic indicators. While geopolitical tensions simmer down, there’s a cautious optimism fueled by talks of US interest rate cuts juxtaposed with weaker-than-expected job data. Brent crude has been holding steady around $83 per barrel, with modest increases seen in both Brent and NYMEX WTI futures. But what lies ahead? Despite short-term bearish sentiments, the horizon suggests a tightening supply, thanks to robust refinery activities and the Northern Hemisphere’s driving season kicking in. We’re eyeing the high $80s per barrel for Brent this summer. But the big question mark remains OPEC’s decision on extending production cuts. Will they keep the taps tightened or opt for a different strategy? Meanwhile, Henry Hub front-month futures witnessed a significant surge, settling at $2.301 per million BTU on May 9th, the highest in 4 months, driven by inventory reductions and operational resumption of the Freeport LNG export terminal. Although storage levels remain above average, the surplus has notably narrowed, signaling potential shifts in market dynamics.

Pablo Giorgi (02:48):

Moving to NGLs, ethane prices experienced an uptick, rising from 17.81 cents per gallon to 19.00 cents per gallon, a 6.68% increase. Meanwhile, natural gas prices at Henry Hub surged significantly more, highlighting the continuation of the oversupply in the ethane market. This week propane witnessed a decline in prices at Mont Belvieu, dropping from 70.88 cents per gallon to 67.81 cents per gallon, a 4.33% decrease. Meanwhile, WTI crude oil prices saw a modest uptick. The contrasting movements hint at distinct market dynamics at play. As propane continues its seasonal descent, benchmark freight rates from Houston to Chiba surged by 9.23%, indicating potentially heightened export activities in response to falling benchmark prices. Terminal fees for propane also saw a significant uptick, rising by 28.57%. That does it for NGLs, moving to Olefins!

Luka Powell (04:01):

In the US ethylene spot market this week, 45 million pounds were transacted at the Texas and Louisiana hubs. Ethylene prices, on a simple average basis, increased and ranged between 19.63 and 21.25 cents per pound for May delivery. Spot activity along the USGC was low to moderate, with ethylene production cash costs declining significantly due to lower feedstock prices, particularly propane and butane. Butane-based production cash costs are now half of what they were at the beginning of March and are nearly on par with ethane-based production costs. Ethylene demand is stable to slightly up, with strong exports and stable derivative production for both domestic and export markets. March saw strong ethylene and polyethylene exports, with net equivalent ethylene exports, just shy of the record set in February, taking into account both direct ethylene exports as well as ethylene contained in derivative exports. The ethylene forecast has changed this week, see the NALO for more information.

Pablo Giorgi (05:05):

The US polymer-grade propylene spot market was very active this week, with 79 million pounds transacted for May delivery. The May US Gulf Coast PGP 45-day weighted-average price is now 42.53 cents per pound, down 0.32 cents per pound from April. On the other hand, the refinery-grade spot market had no deals recorded. The propylene market is moving towards a more balanced position as demand improves following derivative production outages. Most units are running well, and Dow’s PDH unit is back online after an operational disruption last week. Supply has faced challenges, with Enterprise’s PDH1 unit still down for turnaround and PDH2 operating at lower rates until operational issues are corrected, with a turnaround planned for early June. In Canada, Heartland Polymers’ PDH unit is also down for a two-month turnaround until the end of May. Inventories are below the five-year average but are expected to build throughout Q2 as the market restocks. The propylene forecast has not changed this week, see the NALO for more information. And with that, let’s wrap up the Wrap-Up!

Luka Powell (06:20):

Join us on September 9 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.

Pablo Giorgi (06:44):

Don’t forget to subscribe to our podcast on Soundcloud, Spotify, Apple podcasts, or wherever 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.