US ethane prices have room to fall - Westlake

01 May 2008 19:28  [Source: ICIS news]

HOUSTON (ICIS news)--The margin advantage enjoyed by US ethylene producers with light feed crackers could improve as ethane feedstock prices feel the effects of increasing supply, a Westlake official said on Thursday.

“[Ethane] supply has increased, but demand is maximised so the price is dropping closer to the btu value than it was during the fourth quarter of last year,” said Westlake chief executive Albert Chao during a conference call with investors.

More ethane is being extracted out of natural gas from the US Rocky Mountains and Gulf coast regions, Chao said. Sizeable investments have been announced for gas pipelines and fractionators to supply more ethane to the Gulf coast petrochemical industry, he said.

He also noted that ethane could be extracted from a new stream of LNG imports to the US.

Meanwhile, Westlake and other producers in the ethylene and polyethylene (PE) chain are already running as much ethane as possible through their crackers, and the cost advantage of production relative to naphtha cracking has helped drive US PE export volumes higher.

US PE exports were close to 20% of domestic production this year, according to Chao. Westlake, historically not a major PE exporter, has increased its export percentage to about 15%, higher than 1-2 years ago, he said.

Mont Belvieu,Texas, indicative ethane prices averaged about 91 cents/gal on 30 April compared with 114 cents/gal on 4 January.

($1 = €0.64)

For more on ethylene and polyethylene visit ICIS chemical intelligence

By: David Barry
+1 713 525 2653

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