Luka Powell (00:14):

Welcome to the Olefins Weekly Wrap Up. Today is Friday, July 12th, and I’m your host, Luka Powell.

Pablo Giorgi (00:21):

And I am Pablo Giorgi.

Luka Powell (00:24):

And together as Chemical Market Analytics, we recap the top events moving the ethlyene 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.

Luka Powell (00:39):

Hurricane Beryl hit Texas earlier this week. Is everyone in Chemical Market Analytics okay over there, Pablo?

Pablo Giorgi (00:49):

Yeah, thanks for asking. Most people are still without power, although I am one of the lucky ones that has power back.

Luka Powell (00:57):

How was the impact of the hurricane?

Pablo Giorgi (01:00):

Well, we’ve been publishing hurricane reports daily for our clients with the status of each of the impacted sites, but in a nutshell, it was not as bad as people feared it could be.

Luka Powell (01:13):

Good, good on some positive news. England has made it to the finals of the Euros this weekend where we’ll be playing against Spain, so I’m very nervous. It’s a very strong team to be playing against.

Pablo Giorgi (01:27):

Well, and Argentina has made it to the Copa America Finals as well. We are gonna play Colombia and we have some clients there over there that you know, I might be cheering against just for this weekend. Easier for me though with three prospect teams. I have a lot of teams to rally for.

Luka Powell (01:50):

But you know what isn’t rallying?

Pablo Giorgi (01:52):

The energy markets?

Luka Powell (01:56):

The crude oil market concluded its four-week rally with a slight decline in prices. On July 11, Brent front-month futures dropped by 2.3% from the previous Thursday, closing at $85.40 per barrel. Concurrently, WTI front-month prices fell to $82.62 per barrel, down 1.5% from the prior Wednesday. Concerns about

Hurricane Beryl’s impact on production were eased as it caused minimal damage and no significant production loss. Several offshore oil platforms in the Gulf of Mexico were shut down as a precaution last week, but the ports of Corpus Christi and Houston resumed operations by midweek with limited impact. Renewed optimism for robust demand emerged from the EIA’s latest weekly report, which showed above-average gasoline demand of nearly 9.4 million barrels per day during the Independence Day week.

There were also stock withdrawals for both commercial crude and total gasoline, despite increased crude oil processing. .

Luka Powell (02:59):

Additional demand optimism was fueled by a positive CPI report, marking the first month-over-month decline since May 2020, potentially supporting a rate cut in September.

On the supply side, OPEC+ exhibited strong unity, achieving a record compliance level in June.

In natural gas, U.S. Henry Hub front-month futures prices settled at $2.268 per MMBtu on 11 July, marking another significant weekly decline, primarily due to increased supply, while gas-to-power demand has remained relatively steady compared to last summer. This downward trend over the last three weeks has erased gains made over the previous two months. U.S. gas storage remains robust, rising by 65 billion cubic feet (Bcf) week-on-week to 3,199 Bcf for the week ending 5 July.

Concerns about Hurricane Beryl’s impact on U.S. LNG exports have receded. U.S. liquefaction plants and LNG production were largely unaffected by Hurricane Beryl, with only Freeport LNG cutting production over the weekend. Freeport LNG planned to resume operations after the storm had passed.

Pablo Giorgi (04:14):

Moving to NGLs , Ethane prices increased this week from 15.81 last Friday to 16.56 cents per gallon on Thursday, a 4.74% increase. Ethylene crackers preventive shut downs or slowdowns as a result of hurricane Beryl reduced demand for ethane. Nevertheless, with less demand for natural gas, and reduced gas processing, the supply of ethane was reduced even more than the demand.

Non-TET propane prices at Mont Belvieu decreased 4.14% this week, closing at 81.13 cents per gallon. The biggest reason for the decline was more domestic availability of propane with reduced exports due to hurricane Beryl. Most of the ports that shut down due to the hurricane are back up already, though. The freight to Asia also declined as a result, the benchmark freight rate from Houston to Chiba went from $111.50 to $95.50 per metric ton.

That does it for NGLs, moving on to Olefins!

Luka Powell (05:23):

The US ethylene spot market had 90 million pounds of deals done at the Texas and Louisiana hubs this week. Ethylene prices rose this week, trading between 25.125 and 30.50 cents per pound for July delivery. Hurricane Beryl made landfall near Matagorda early Monday as a category 1 hurricane. The path of the storm included important petrochemical hubs such as Corpus Christi and Freeport. Several units in its path shut down preventively, while some others reduced rates.

Most units are back up, the main exception being the Formosa OL 1 unit at Point Comfort, which is expected to remain down until the end of July due to damage from the storm. The 2 other crackers at the site are back up and running.

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

Pablo Giorgi (06:13):

This week was somewhat active in the US polymer-grade propylene spot market, with 26 million pounds traded for July delivery. Prices increased and traded between 51 and 51.5 cpp. Hurricane Beryl caused more disruption to propylene production than demand. Besides the crackers that went down, Dow’s PDH unit in Freeport was also down, and Phillips 66 FCC unit in their Sweeney refinery was also reported down. All those units are back up already.

Enterprise’s PDH1 unit in Mont Belvieu went down on Monday because of the severe weather and is expected to come back up later today. The propylene forecast has changed this week, see the NALO for more information. And with that, let’s wrap up the Wrap Up!

Luka Powell (07:03):

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 (07:28):

Reach out for a special discount code until July 31st.

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.