US ethylene and PE margins headed for a record in Q1

It’s going to be a bonanza in the first quarter for US ethylene and polyethylene producers using ethane/propane feedstock.

Buoyed by abundant natural gas liquids (NGL) production from shale gas, margins are headed for record highs, even as spot ethylene prices come off a bit, noted Susquehanna International Group analyst Don Carson.

“With increases in Asian and European resin prices making US exports incrementally more competitive once again and scheduled US maintenance outages set to take more than 10% of capacity off-line in April and May, the near-to-intermediate term outlook for ethylene chain profitability remains positive,” said Carson.

And JPMorgan analyst Jeffrey Zekauskas has upgraded Westlake Chemical to an “outperform” rating, citing “oceans of ethane” feedstock.

“Oversupply conditions in ethane stand to become materially looserover the next several years,” said the analyst.

“According to Lyondell’s data, ethane production,if maximized, would about touch 1.6m bbl/day by the second half of2014,” said Zekauskas.

“Ethane production today is roughly 1m bbl/day. Anincremental 600,000 barrels of ethane per day is capable of being used asfeedstock for 21.2 billion incremental pounds of ethylene. North Americanethylene production inclusive of projects to convert napthenic and propanecrackers to ethane is probably no more than 5 billion lbs. Accordingly, a loosemarket should slacken further,” he added.

, , , , , ,

Leave a Reply