Plastics Feedstocks (Oil, Naphtha, Propane)
- Since our last report, oil and naphtha are down in price despite the conflict in the Middle East, while propane pricing is unchanged.
- WTI crude oil is down about 6% the past two weeks despite heavy conflict in the Middle East. One reason that prices may have dropped is that Saudi Arabia and its oil producing allies have more spare oil capacity now than at any time in the past 10 years except for the Covid years (2020-2021) when demand dropped significantly. This spare capacity could come on quickly in the event of a price spike.
- Naphtha prices (CIF Japan) are also lower by 6% with recent pricing at $660/mt
- Physical propane prices in Mont Belvieu, TX are down only about 2% to a spot price of 69 cents per gallon (cpg).
- Physical PGP prices have traded between 38.5cpp and 41.5cpp since the 2nd half of September. Yesterday the closing price for physical PGP in Mont Belvieu was 40.5cpp. Most of the increase in PGP pricing was a result of the PDH issues at Dow and Enterprise 1 that occurred in the Aug/Sep time frame. Back in August PGP prices were trading between 31cpp and 33cpp,
- The month to date calendar average for PGP is 40.5cpp according to the PetroChem Wire. BlueClover is revising our October contract PGP price guess to 42cpp (up from 41cpp in our last report).
- BlueClover is estimating Nov Contract PGP at 37cpp (up from 35cpp in our last report) and December contract PGP at 35cpp (up from 34cpp in our last report).
- What’s somewhat interesting is that we have revised our Oct, Nov, and Dec contract PGP prices higher despite pricing in crude oil moving lower the past two weeks. The reason is the physical PGP market has been resilient in this 39-41cpp range as as we cross into the 2nd half of October. BlueClover still expects physical PGP pricing to slide into the mid to low 30s over the next two months but we think the pace or speed of the price move will be slower than expected a couple of weeks ago.
- PP capacity continues to operate at reduced levels because of some planned and unplanned outages highlighted in our last report. The market is handling the reduction in supply well as demand is starting to subdue. We are past some of the orders that would make its way to the store shelf for the holiday shopping period. Also, as PGP prices remain elevated and another price increase is in store for October, convertors see more risk to “paying up” in price as compared to buying in August when PGP and PP prices were cheaper.