04 April 2012 20:50 [Source: ICIS news]
HOUSTON (ICIS)--The series of US cracker turnarounds pushed down ethane prices because of reduced demand and excess inventory, but prices will climb by the end of May, said an analyst on Wednesday.
“The turnarounds reduced demand enough, probably, to result in some unwanted inventory accumulation by ethane producers and marketers,” said analyst Dan Lippe of Petral Consulting Company.
Ethane prices have ranged from 45-55 cents/gal (€0.09-0.11/litre).
Lippe said, “Most of the accumulated inventory during March and April will be liquidated by the end of May.”
Midstream Energy Group president Anne Keller agreed that once the crackers are back online and running by the early third quarter, ethane prices will climb as demand strengthens.
“With quite a bit of inventory built up, I wonder how long the ramp-up will take, but [I] would expect that eventually demand will chew through [the ethane surplus] and lift prices again,” she said.
Lippe said in May two raw mix fractionators will be down for turnaround at Mont Belvieu, Texas.
“We do not have 300,000 bbl/day of spare fractionation capacity so the daily production of ethane from raw mix [of natural gas liquids] will be curtailed by 150,000 bbl/day,” said Lippe.
This will further tighten ethane supply as crackers come back online, and force prices higher, said Lippe.
Currently, ExxonMobil is performing a turnaround on a cracker, and Lyondellbasell is working on two crackers. Four more crackers are expected to have turnarounds in April.
|Capacity (tonnes/year)||Shut Down||Length of Shutdown||Status|
|BASF||Port Arthur, Texas||934,000||Mid-April||50 days||Pending|
|INEOS||unconfirmed||not available||April||not available||Pending|
|DuPont||unconfirmed||not available||April||not available||Pending|
|CP Chem||unconfirmed||not available||April||not available||Pending|
|ExxonMobil||Baytown, Texas||1,000,000||Early February||not available||Ongoing|
|LyondellBasell||Channelview, Texas||two units, each at 873,000||Late February & Early March||7 weeks & 2 weeks, respectively||Ongoing|
($1 = €0.76)
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