The price of the hypothetical NGL barrel at Mont Belvieu, Texas, rose for the 10th straight week, passing $29 for the first time since February.
Propane and butanes drove the increase, but ethane’s steady rally—stalled by Hurricane Harvey—gave indications of resuming with the realization that Mont Belvieu fractionators did not sustain serious damage and that the recovery from flooding was progressing.
Harvey dumped more than 50 inches of rain on Mont Belvieu, which severely impacted pumps and brine ponds. En*Vantage estimated that flooding shut down half of the hub’s 2 million barrel per day (MMbbl/d) fractionation capacity.
Mont Belvieu’s ethane price held steady last week but at Conway, Kan., ethane took a 16.2% tumble to its lowest level in a year, since the first week of September 2016. That pushed the ethane margin at Conway into negative territory. Mont Belvieu’s margin expanded slightly.
With ethane scarce, polyethylene prices locked in a 3 cent per pound average price increase for August, Michael Greenberg of The Plastics Exchange reported. Most producers added a 4 cent per pound increase for their September contracts.
“Given the massive supply disruptions, we expect these additional increases to also become solid,” Greenberg wrote. “Sometime in the future, as the new, but again delayed plastics plants come online, we expect these increases and probably more to eventually peel back off.”
Recovery for the ethylene plants will depend on how quickly derivative plants, such as producers of polyethylene, can recover, En*Vantage said.
The price of propane continued its winning streak, climbing above 80 cents per gallon (gal) at Mont Belvieu and reaching seven-month highs at both hubs. Mont Belvieu saw a 6.4% increase in the past week while Conway’s price rose 5.8%. Margins widened at both hubs. In the last year, propane’s price has increased by 74.9% at Mont Belvieu and 87.2% at Conway.
En*Vantage noted that Harvey’s impact on refineries could have reduced propane production by 60 Mbbl/d and troubles at Mont Belvieu could have taken another 300 Mbbl/d off the market. This has tightened international propane balances, leading to widening spreads that will bolster propane exports when ships can return to Gulf Coast terminals.
The price of butanes continued to rise, despite the shutdowns of many refineries, as international spreads widen, revealing what En*Vantage believes is pent-up demand. At Mont Belvieu, the price of normal butane rose 5.1% in the last week and 51.7% in the past year. At Conway, the weekly rise was 5.9% and the yearly difference was 69.2%.