We are seeing some monomer price weakness in the US, despite the rising costs. For ethylene, this is likely because of increased supplies (new capacity and turnarounds ending) and all capacity to consume running at full rates, including the export terminals. There is plenty of margin in exporting ethylene today and US prices are not falling because they need to find another buyer internationally. We could see some opportunistic buying for inventory at these prices, especially if you believe that the conflict in Ukraine is not ending soon and also if you are concerned about more extreme weather as we move through the summer in the south of the US.
Source: Bloomberg, C-MACC Analysis, March 2022
Meanwhile, propylene prices have edged higher in the US and the spread over propane remains well above the 5-year average, although well below where it was for most of 2021. This is likely still a function of the very strong demand for propylene derivatives in the US, which could strengthen further if the auto industry can remove some of its other bottlenecks. The US needs substantial volumes of propylene from PDH to balance the market and prices will likely remain supported as long as propane demand is high and could rise more rapidly if propane gets pulled more heavily into Europe as an alternative fuel to natural gas. Given European natural gas prices, the region could pay a lot more for propane if there is flexibility to use it and ships/terminals to move more. See more in today's daily report.
Source: Bloomberg, C-MACC Analysis, March 2022
