US ethane prices to rebound in late May on less supply, more demand

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.

Company

Location

 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)

 


By: Sheena Martin
+1 713 525 2653



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