Plastics Feedstocks (Naphtha, Propane, Oil and Ethane)
- Naphtha prices (CIF Japan) are lower by about 3.5% over the past two weeks to a price of $686/mt
- Propane pricing is lower by 2% to a spot price of 78.875 cents per gallon (cpg) in Mont Belvieu, TX. Both naphtha and propane are lower as a result of the lower pricing in the crude oil markets.
- Crude Oil prices are lower by 5% with prices for WTI at $73.40/barrel today and Brent at $79.64/barrel.
- Ethane prices are up 2cpg to 24cpg in Mont Belvieu, TX.
- Over the past two weeks, ethylene prices in the Enterprise system in Mont Belvieu, TX have been incredibly stable around 22 cents per pound (cpp).
- Compared to two weeks ago, Physical PGP prices in Enterprise’s system are only down 1cpp to 55cpp from 56cpp two weeks ago but that does not tell the whole story.
- According to the PetroChem Wire, on March 2, physical PGP traded at 71cpp, when the previous March trade was at 53cpp on Feb 28th. Physical PGP prices topped out at 73cpp on March 8th. Last Friday prices retreated to 69cpp, and then yesterday retreated to 55cpp. At these price points there is significantly smaller volumes transacting since it is uneconomical for many PGP derivatives producers to buy physical PGP with a number that starts with a 6 or 7.
- If prices were to remain at 55cpp for the rest of March, the expected March calendar average price for physical PGP would be 60cpp. BlueClover is estimating that the balance of March will have physical PGP pricing below 55cpp so we expect the March calendar average to settle less than 60cpp.
- At the end of February, BlueClover was expecting physical PGP prices to fall below 50cpp and the March contract PGP price to settle flat at 50cpp. Well we were wrong. We have been extremely surprised by the difficulties in getting the Enterprise and Invista PDH units up and running. Additionally, I recently learned that the Shell steam cracker in Deer Park, TX (which has a flexible feedstock stream and therefore has the option to produce significant amounts of PGP) went down in late late January due to tornado damage.
- BlueClover is now estimating March contract PGP to be up 10cpp. BlueClover still expects physical PGP pricing to fall into the 40s in the April time frame and therefore contract PGP pricing to come down in April. Our current guess for an April contract PGP range is 48-52cpp.
- PP supply has been consistent in the 1st quarter of 2023 with most grades available. As we mentioned in previous reports, PP production increased in January according to ACC data.
- There is a disconnect in the market. Producers need to raise prices for prime virgin material as a result of he increased PGP feedstock costs. However, overall demand for most PP convertors is lower year on year as consumers focus less on household items/durable goods and instead use their spending power on experiences/trips. This is leading to a drastic spread between widespec and prime PP pricing which is only going to get wider in March from already wide spreads in February. PP producers are selling widespec material at a loss at times because of this overall demand picture.
- As PGP prices retreat in the coming months, customers will see a decrease in the price of their prime materials but widespec pricing may decrease only marginally or not at all because it has not rallied to the same extent.