Mont Belvieu, Texas, ethane/propane mix prices continued to weaken in comparison to purity ethane Tuesday as sources pointed to an oversupply of the mix.
Non-LST e/p mix, consisting of 80% ethane and 20% propane, fell 62.5 points to 16.625 cents/gal. Its discount to purity ethane has widened from nearly 2 cents a month ago to 5.75 cents Tuesday afternoon. Since May 1, e/p mix has dropped 5.5 cents.
The move comes as butane has become the preferred cracker feedstock with margins at 10.37 cents/lb as of Monday, compared to 7.68 cents/lb for butane. Gains in butane margins suggest not only weakness is butane prices -- down 50 points to 63.50 cents/gal -- but higher costs of cracker byproducts.
US Gulf Coast ethylene had been at an 11-month low last week because of an oversupply of material and new crackers coming online, while propylene prices have been picking up on export demand recently. This comes as ethane and propane costs for the olefins markets have come down this week. Non-LST ethane on Tuesday ended at 22.375 cents/gal, which was down 2 cents from a week earlier.
Non-LST propane on Tuesday was at 57.75 cents/gal, down by 2.875 cent from a week earlier.
E/p mix prices have also weakened in Conway, Kansas, closing at 10 cents/gal on Tuesday, a low since January. With shipping rates from Conway to Mont Belvieu around 6 cents/gal, offers for Mont Belvieu e/p mix in the 16-cent range make sense, a market source said.
"There is must-recover e/p out there [Conway] and a number of the older plants must produce," the source said, adding "very little space is reserved for e/p so an oversupply will need to be quickly cleared with price."
Other sources have suggested that cracker outages may also be affecting e/p mix prices. CP Chem's Sweeny 22 cracker and Eastman's Longview crackers are both idled and believed to take e/p mix as feedstock. ExxonMobil Beaumont and BASF/Total Port Arthur are down for maintenance but market participants have said they do not think they are consuming e/p mix.
