US ethane may stabilise at 40 cents/gal on $4/MMbtu natgas – Dow

14 June 2012 18:41  [Source: ICIS news]

HOUSTON (ICIS)--US prices for feedstock ethane would likely reach about 40 cents/gal if natural gas stabilises at $4/MMBtu, an executive at Dow Chemical said on Thursday.

A general estimate for ethane prices can be calculated by first adding $2/MMBtu to the price of natural gas, said Bill Weideman, chief financial officer for Dow Chemical.

The additional $2/MMBtu accounts for fractionation costs, he said.

The price for ethane is then calculated by dividing the sum by 15, Weideman said.

Dow expects US prices for natural gas to stabilise to about $4/MMBtu. Under Weideman's formula, ethane prices would be about 40 cents/gal.

Currently, ethane prices are below 30 cents/gal, a level last reached in mid-November 2002.

Natural gas prices are below $2.50/MMBtu, a level that Dow considers unsustainable.

Such low levels would discourage producers from producing natural gas, which, in turn, could lower production of ethane and propane.

Dow and other US producers use such natural gas liquids (NGLs) as feedstock for ethylene.

Weideman made his comments during the Deutsche Bank Global Industrials and Basic Materials Conference.

By: Al Greenwood
+1 713 525 2645

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