07 May 2012 15:55 [Source: ICIS news]
HOUSTON (ICIS)--Concerns about a sharp spike in US ethane prices for June are exaggerated because of higher ethane production, higher ethane inventories and cheaper propane, an analyst said on Monday.
The concerns are arising because a heavy cracker turnaround season is ending, with about 12% of North American ethylene capacity restarting, said David Begleiter, an analyst with Deutsche Bank. He made his comments in a research note.
However, ethane production is up 25% year on year, reaching 1.03m bbl in February, he said. Ethane inventories are up 20% year on year to 27.7m bbl, he said. Meanwhile, propane prices are off 14% since mid-March, he said. Many US crackers can use propane or ethane as feedstock.
As a result, ethane prices may rise modestly in May through September, he said. Prices should weaken again in the fourth quarter because of new fractionation and pipeline capacity, he said.
Ethane prices are currently at 41 cents/gal, he said.
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