Railcar &PetroChemical Update:US Chemical Shipments up 0.2%.Ethane -1c/gal to 23c/gal
摘要: Railcarloadings4-weekmovingaverageup0.7%.Weeklyloadingsdown2.1%.The4-weekmovingaverageofchemicalrail
Railcar loadings 4-week moving average up 0.7%. Weekly loadings down 2.1%.
The 4-week moving average of chemical railcar loadings increased 0.7% inWeek #24 (ended 06/11/2016) vs. a 2.2% increase the prior week. LoadingsYTD are up 2.5%. Chemical railcar loadings represent 30% of total US chemicalshipment tonnage (followed by trucks, barges, and pipelines), offering a trendof broader chemical industry activity and demand. The more volatile measureof weekly loadings declined 2.1% YoY (versus a 4.3% decline in the prior week)and increased 4.3% sequentially (vs. a 11.6% decrease in the prior week).
Ethane prices down 1 c/gal to 23 c/gal. Propane down 1 c/gal to 50 c/gal.
Ethane prices fell 1 c/gal this week to 23 c/gal (vs its fuel value of 18 c/gal). In2H16-’17, we expect ethane to trade at or near its fuel value plus 10 c/gal (itshistorical premium to account for fractionation, transportation and storagecosts). Based on DB’s US Natural Gas price forecasts of $2.41/MMBtu in ’16and $3.13/MMBtu in ’17, this results in an ethane price range of roughly 25-30c/gal. While US ethane supply/demand fundamentals are currently loose(ethane rejection remains at near-record levels of 500-600k bpd), we expectfundamentals to get tighter in 2H‘17 owing to Enterprise Products’ new 200kbpd ethane export facility (expected on-line Q3’16) and the start-up of 7greenfield ethylene crackers in ’17-’18 (up to 540k bpd of demand).
Propane prices fell 1 c/gal this week to 50 c/gal. Propane inventories rose 1%this week to 78MM bbls and are 29% and 42% above their 3- and 5-yearaverages, respectively. Longer term, we expect propane inventories to declinedue to increased exports (up 12% in ’15 vs 30% in ’14, expected to be up in ’16vs ‘15).
Spot ethylene up 1 c/gal to 26 c/lb. Margins expand 1 c/gal to 13 c/lb.
Spot ethylene prices rose 1 c/gal this week to 26 c/lb (vs the May contractprice of 30.0 c/b). The spring turnaround season in the US crackers remainsongoing with three crackers currently down for maintenance. Spot deals forJune delivery were completed between 25.25-26.75 c/lb with deals for Julyranging from 26.125-26.75 c/lb. Spot ethylene margins expanded 1 c/lb thisweek to 13 c/lb as cash costs decreased on lower feedstock prices. Polymergrade (PG) propylene spot prices were flat this week with deals for Maydelivery completed at 30.375 c/lb. This compares to March 2015 PG and CGcontract prices of 49.0 c/lb and 47.5 c/lb, respectively.
6.3% of North American ethylene capacity expected to be offline in June.
IHS expects 6.3% of North American (NA) ethylene capacity to be offline inJune vs 8.5% in May. Lyondell’s Corpus Christi, TX cracker (2.2% of NAethylene capacity) remains offline for planned maintenance. Eastman’sLongview, TX 3A cracker (0.4% NA ethylene capacity) is expected to restartthis weekend following the completion of planned maintenance. Dow’s PDHunit remains offline following a compression trip in mid-May. For ’16, IHS isforecasting NA ethylene production losses of 4.4B lbs, or 5.5%, of NA ethylenecapacity. This compares to NA ethylene production loses of 3.3B lbs, or 4.3%,of NA ethylene capacity in 2015.
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