Middle East set to increase ethane feedstock prices

The era of massive feedstock cost advantage for the chemical industry may be coming to an end. According to a report out today from bank HSBC, a review is expected to gradually push natural gas prices up from $0.75/mmbtu up to $2/mmbtu by 2015. 

With US natural gas prices falling to around $4mmbtu thanks to shale gas, the cost advantage looks like it will be fast disappearing. This is especially true when you factor in the extra logistics costs from the Middle East plus depreciation of those shiny new ethane cracker assets.

The discount for liquid feeds is also predicted to decrease from the current 28% down to 25% by 2014. 

HSBC What Price is Right


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