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USGC ethane rebounds from two-month low as ethylene spikes on production outages

Highlights

Ethane sees weakness on lack of petchem demand

Outages due to Hurricane Laura continue due to power outages

Ethylene prices spike on cracker outages

  • Author
  • Andrea Salazar    Astrid Torres
  • Editor
  • Benjamin Morse
  • Commodity
  • Natural Gas Oil Petrochemicals

New York — US Gulf Coast ethane prices bounced back from two-month lows Sept. 4, as ethylene prices climbed to an 11-month high on production disruptions caused by Hurricane Laura.

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September non-LST ethane, reflecting prices at the Enterprise NGL storage and fractionation facility in Mont Belvieu, Texas, rose to close at 19.375 cents/gal.

Ethane had traded at as low as 17.50 cent/gal in the morning, after starting the day at 18 cents/gal and topping 19 cents/gal after 12:30 pm CDT.

Ethane prices rose despite a lack of cracker demand following Hurricane Laura, as cracker restarts in the Lake Charles, Louisiana, area have been delayed by power outages.

"Lost a good amount of ethane demand," a trader said. "And of course ethylene got tight as production went very low. I bet ethane extraction margin goes negative. Just too much loss of ethane consumption and ethane storage should get full unless we increase rejection soon."

Ethane/NYMEX natural gas frac spreads have been narrowing from as high as $1.53/MMBtu to $0.32/MMBtu on Sept. 3.

Platts Analytics estimates that 6,445 mt/yr of ethylene capacity is offline at Orange and Port Arthur, Texas, and Lake Charles combined, or about 16% of US ethylene production capacity.

US Gulf Coast spot ethylene prices rose sharply the week of Aug. 31 amid increased demand following production disruption in downstream derivatives, sources said.

The US spot Mont Belvieu ethylene price posted an 11-month high Sept. 1 where it has remained unchanged the past 3 days, S&P Global Platts data showed.

Spot Mont Belvieu ethylene was assessed at 26.5 cents/lb, its highest level since Oct. 4, 2019, when it was assessed at 27 cents/lb, according to Platts data.

The spot assessment recovered more than 231%, or 18.5 cents, since posting a 16-year low of 8 cents/lb Apr. 3 amid coronavirus-related demand destruction.

Spot Choctaw ethylene was 1 cent higher on the day at 28 cents/lb on Sept. 3, the highest since Platts began the assessment Mar. 2.

The spot assessment has recovered more than 286%, or 20.75 cents, from the lowest level since Platts started assessing it, and the lowest-ever price recalled by sources at 7.25 cents/lb Apr. 7.