Dow's US ethylene plants reap benefits from cheap propane

26 July 2012 18:05  [Source: ICIS news]

HOUSTON (ICIS)--US-based Dow Chemical stands to benefit from cheap propane that can be cracked into ethylene, the company's chief executive said on Thursday.

Among producers in the US Gulf coast, Dow has a third of the region's propane-cracking potential, said Andrew Liveris, Dow chief executive.

Liveris made his comments during an earnings conference call.

When propane became the preferred feedstock for ethylene production during the second quarter, Dow was able to switch from ethane, Liveris said.

During that time, the US had a propane glut, caused by a warm winter and increased production of natural gas. At the end of May, US Gulf propane prices approached three-year lows.

Looking forward, Dow expects propane to remain long, creating a ceiling on ethane prices, Liveris said.

Such a development should allow US ethylene producers to maintain their cost advantage against those in much of the world.

Those crackers rely on oil-based naphtha as a feedstock, while US plants rely on natural gas liquids (NGLs).

The advent of shale gas has increased supplies of NGLs, lowering their cost.

By: Al Greenwood
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