Gulf Coast ethane prices topped 20 cents/gal on Tuesday for the first time since October, despite multiple steam cracker outages in the region.
Non-LST ethane rose 75 points to 20.375 cents/gal Tuesday as natural gas futures rallied 14.8 cents to settle at $2.088/MMBtu.
Ethane has climbed more than 4 cents since the beginning of the month, which sources attributed to increased buying interest in out-month ethane in anticipation of the Enterprise ethane export terminal set to begin operations at Morgan's Point, Texas, in the third quarter.
"I'm not really sure why [ethane] and [e/p mix] are so strong," a trading source said. "It doesn't make sense to me, especially with all the crackers going down for turnaround. The only think that makes sense is the buying out the curve, and there is lots of storage, so maybe some are buying and storing."
Five crackers are currently offline, according to Platts data. Eastman Chemical's No. 3 steam cracker in Longview, Texas, began a 60-day turnaround on Monday, along with Westlake's Lake Charles, Louisiana, Petro-1 steam cracker, which is expected to be down for 80 days. LBI began a 120-day turnaround on April 13 at its Corpus Christi, Texas, plant. Ineos shut its Olefins No. 1 ethylene plant in Alvin, Texas, on April 4 for 40-70 days, and CP Chem 24 began a 40- to 50-day turnaround at its Sweeny, Texas plant on on March 17.
Despite those turnarounds, ethane continues to show gains from as low as 16 cents/gal on April 1. Ethane/propane mix, a mixture of 20% propane and 80% ethane, from the Enterprise terminal was at a 1-cent premium to Enterprise ethane. It has not fallen to a discount to ethane since February 2. Non-LST e/p mix priced at a premium to non-LST purity ethane on only 12 days in 2015.
Market sources have attributed strength in e/p mix to strong propane, which Platts assessed at 45.00 cents/gal, or 46% of crude futures, as well as the possibility of physical shortfall at Mont Belvieu.
"Just more demand than [what is] being produced at, and pumped into, Belvieu," a source said.
Another trading source was confused by the strength in Mont Belvieu e/p mix, noting that there has been "a lot of buying in Conway by others that can only be shipping to Mont Belvieu."
"Again it can be just to store because I don't think there is a huge demand for it," the source said.
