17 April 2012 17:18 [Source: ICIS news]
NEW ORLEANS, Louisiana (ICIS)--A warm US winter and increased production has led to a surplus of propane, and ethylene producers are unlikely to pick up the slack by switching away from ethane, a consultant said on Tuesday.
Even if exports for propane were maximised, there would still be a surplus, said consultant Kristen Holmquist with BENTEK Energy at the Gas Processors Association's annual meeting in New Orleans.
She said the warm winter has been a significant contributor to the high inventory levels, as every region of the US has seen abnormally high temperatures. Propane is used to heat homes.
The US Energy Information Administration reported propane inventories at 45.4m bbl for the week of 6 April, up 70% from the same week last year. Last year, inventories were at 26.7m bbl.
Holmquist said there is a surplus of about 100,000 bbl/day, or 20% of the current daily demand.
Propane can be used for ethylene production. However producers favour ethane, Holmquist said.
To be competitive against ethane, Gulf coast propane spot prices would need to drop by a substantial amount.
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