US ethane spot prices plunge amid market sell-off

11 October 2018 21:44 Source:ICIS News

HOUSTON (ICIS)--US ethane spot prices plunged below 40 cents/gal on Thursday, down over 7 cents from Wednesday as the market sell-off hit the natural gas liquids (NGL) sector.

This is bubble wrap made with polyethylene. Image by Al Greenwood

Ethane for October delivery was heard trading down to 35.00 cents/gal FOB (free on board) Mont Belvieu, Texas, in the morning before recovering to around 37.50 cents/gal by the afternoon, sources said.

ICIS last assessed ethane at 49.25 cents/gal on 5 October.

A trader who normally buys big volumes was heard selling, an NGL broker said.

Ethane has shed nearly half of its value in under a month, as the sell-off in physical ethane continued from mid-September when barrels at the market hub hit as high as 62.00 cents/gal.

Much of the downturn can be attributed to steam cracker outages in the region, consultant Peter Fasullo of En*Vantage said, adding that once those plants come back online and new plants start up, ethane can get very tight again.

“I see ethane being oversold [and the market] still has very tight fractionation capacity so that won’t get resolved anytime soon,” Fasullo said.

An ethylene unit was taken offline for a turnaround in mid September and is expected to restart in late October. Two other ethylene units remain offline due to economic decisions.

Propane prices also plunged, trading down to 97.00 cents/gal FOB Mont Belvieu, Texas, down from 104.00 cents/gal on 5 October, according to ICIS data.

NGLs are important to the petrochemical industry because they are the predominant feedstock for crackers in the US.

By Steven McGinn