We have a fairly stable week for US olefins so far – no new production disruptions, but the industry is still recovering from the storm-related shutdowns over the last 4 weeks. We still believe that there is a downside to ethylene and propylene in the US as production recovers and as demand normalizes (especially for propylene). With another month of hurricane season to go, however, it probably does not make sense to force surpluses into an export market where prices are much lower – especially for ethylene. As we have noted in the past, the right strategy in 2020 was to store the ethylene at this time rather than sell it. Inventories would likely have to rise further before those with surpluses were willing to take the cut needed to export. At the same time, rising natural gas and NGL prices are another reason to hold on to products as what you have today did not cost that much to make and costs may rise near term. See more in today's daily report.
Source: Bloomberg, C-MACC Analysis, September 2021