US Gulf Coast ethane Wednesday reached its highest level since October, climbing 50 points to 19 cents/gal, as ethylene prices continue to hover near their highest level in seven months.
Spot ethane strengthened despite drops in both crude and natural gas futures. Platts assessed NYMEX May light sweet crude down $1.79 to $39.75/b on a larger-than-expected crude build last week, while NYMEX April natural gas futures settled down 6.9 cents to $1.794/MMBtu on bearish storage expectations.
Non-LST ethane has climbed to an average of 17.4 cents/gal so far this month, 2.8 cents/lb above the 14.6 cents/gal average in February, Platts data showed. In March 2015, ethane was at 18.3 cents/gal and pricing at the 16% of crude futures, compared to the 20% of crude futures on Wednesday.
Higher ethylene prices, hovering near early August highs of 32 cents/lb FD USG, have been leading to maximizing ethylene production, which in turn has driven up demand for US ethane, olefins trading sources said. It takes 1.289 lb of ethane to produce one pound of ethylene, Platts Analytics data showed.
Platts assessed March ethylene at 31.75 cents/lb ahead of a busy turnaround season, which is scheduled to take at least four more producers offline in April. Preparation for the active turnaround seasons has resulted in the higher ethylene pricing and increase storage of product, sources added.
Ethane is currently the favored petrochemical feedstock, as producers aim for maximizing ethylene production, sources said.
A Gulf Coast trading source said ethane demand is expected to rise in the next few months with export demand from the new Enterprise ethane terminal at Morgan's Point and demand from new crackers in the region.
