Luka Powell (00:12):

Welcome to the Olefins Weekly Wrap Up. Today is Friday, July 5th, and I’m your host Luka Powell.

Kathy Hall (00:19):

And I’m Kathy Hall.

Luka Powell (00:22):

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. So there’s a lot going on over here. In the UK, we wake up to a new Prime Minister this morning, and England will be playing against Switzerland tomorrow in the Euros quarterfinals. So I’m a little bit nervous about that, but happy belated 4th of July, Kathy.

Kathy Hall (00:54):

Well, thank you very much. And it’s extra nice of you to extend those wishes considering that in the US, we’re celebrating an event that involved both of our countries today. But in a global economy, any US-specific holiday, It’s a day where the US doesn’t participate in the world markets. So, can you catch us up on what we’ve missed over here, starting with energy futures?

Luka Powell (01:19):

WTI front month prices rose to $83.88 per barrel on the 3rd of July, which was a 2.6% increase from last Thursday. These gradual gains have propelled prices to a two-month high, fueled by a more positive demand outlook. The market is poised to have a supply deficit during the second half of this year, driven by seasonal demand spikes and acceleration in refinery runs.

The US commercial crude stock posted its largest weekly draw since July of 2023 with 12.2 million barrels leaving storage as refinery throughput in CHO up to 16.7 million barrels per day. In light of the recent downturn in US economic indicators, there is growing speculation about a potential interest rate cut in September, which is encouraging confidence in increased energy consumption over to natural gas.

US Henry Hub Front month futures prices settled at $2.42 per million BTU on the 3rd of July, a decline of nearly 9% from last Thursday, and over 22% from the mid-June peak of over $3 per million BTU due to increased natural gas production and a subdued demand outlook. The gas stocks remained elevated at 3,134 billion cubic feet ahead of the Independence Day holiday, with a slightly higher than expected injection.

Luka Powell (02:46):

Despite this, the build is significantly smaller compared to historical seasonal trends. And currently the gas inventory stands at 18.6% above the five-year average. Scorching temperatures in the South Central region could cause lower run rates and the ongoing hurricane season may affect operations in the liquification terminals.

Kathy Hall (03:06):

Wow. Thanks for that. So now let’s take a look at NGLs. Propane in the US, which was less than 70 cents per gallon just a month ago, ended June in the 84 to 85 cents range. It spent the first week of July hovering around 85 cents as well, and ended this holiday-shortened week at 84 cents. But ethane, meanwhile, started last month at 20 to 21 cents per gallon, and it began a steady slide down to 17 cents around the 11th of June Ethane started July with what appeared to be a pop, heading back toward 18 cents, but it turned around this week. Prices ultimately finished the week below 16 cents. And as the steam cracker feedstock, ethane remained preferred in terms of ethylene economics. So you could tell us the latest in ethylene. Thanks Luka.

Luka Powell (04:02):

Deals in the US spot market for ethylene this week totaled 70 million pounds completed at the Texas and Louisiana hubs. Ethylene prices on a simple average basis, decreased settling between 25 to 25.12 cents per pound for July delivery.

The July US Gulf Coast ethylene 45-day weighted average price was 25.68 cents per pound at 1.45 cents per pound increase from the June 45-day weighted average price. Ethylene markets along the US Gulf Coast were quiet this week following the 4th of July Independence Day holiday. Spot prices fell this week for the first time in 10 weeks after a string of outages and plant turnarounds over the past two months, which led to a sharp increase in prices.

No new plant outages were reported this week, but some issues remain. LACC and Lake Charles start their turnaround late last month, and Westlake Sulphur is expected to start theirs in September because of the planned and unplanned maintenance issues. Inventory remains at the five low at the five-year average and is forecast to remain flat through the end of Q3.

Demand remains stable despite the increase in ethylene spot prices. However, US ethylene exports fell 39% in May due to sharp drops in exports to Asia, Canada, and Mexico while derivative exports were down across the board except for vinyls and alpha olefins.

That does it for ethylene. Over to propylene.

Kathy Hall (05:32):

Thank you. Despite the short trading week here in the US, polymer-grade propylene had a busy one with 18 trades seen on Tuesday alone, 18 trades! July delivery PGP had ended June trading around 49 cents per pound. But this week’s activity brought it back above 50 cents.

July traded as high as 53 cents, and then it drifted back down to 51 cents, which made for one exciting afternoon. Overall, 31 million pounds of physical PGP traded this week on paper. PGP trades had totaled 18 million pounds.

Meanwhile, over in refinery-grade propylene, no new pipeline trades were seen at all. That market remained at 12.5 cents where it was last assessed. But the RGP railcar market rose to 44 cents per pound on Monday with two trades at that level, which was up from where it last traded at the end of June at 40 cents per pound.

And so with that, let’s wrap up this week’s Wrap Up.

Luka Powell (06:43):

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Kathy Hall (07:07):

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