Source – RBN Energy – January 4, 2021.
Ethylene, a product from steam crackers, rose to $0.38, nearly 4 times the spot price of April 2020.
The price increase is an example of the strong and rising long-term demand for downstream products, and a contributing factor keeping NGL and ethane demand high as 1/3rd of NGLs end up in steam crackers, as well as 85% of produced ethane. In Mid-2020 as COVID-19 took the world by storm, it caused a short panic crash in the market, which has more than recovered, exceeding even the 2016-2017 average prices as shown in the graphic below.
The primary factors driving the price increase are weather-related cracker outages following Hurricane Laura and Delta, suppressing Gulf Coast operating rates down to 70% capacity, increased demand from new low density polyethylene units coming online in Point Comfort, TX and Lake Charles as well as Gulf coast spot exports volume increases, especially from Enterprise and Navigator’s Morgan’s Point terminal.
For more information, refer to the article at RBN Energy (Jan 4, 2021).