New From PetroChem Wire . . . .

NGLs Week

NGLs Week Newsletter  

NGLs Week is PetroChem Wire's comprehensive summary of price trends, upstream and downstream costs, operations news and supply/demand forecasts. The report contains everything you'll need to understand what's happening in the NGL markets.

For more information, click here.

For all of our products and services, click here.

Butane exhibiting historic price strength relative to crude on rising export levels

HOUSTON, October 17, 2017 (PCW) -- Spot butane prices have averaged at historic levels relative to WTI crude this year, PetroChem Wire prices show, hitting a high of 107.7% in early Feb (see graph below). For the year-to-date, spot butane prices have averaged at nearly 75% of crude’s value, besting the previous record set in 2012 when the annual average was 73.4%.

Similar to propane’s relationship with crude (which NGLs Week analyzed in the previous report), the recent strength has come on the back of robust Asian exports. Unlike propane, butane’s largest source of demand is not exports, but gasoline blending. However, exports are becoming a larger part of the demand pie.

Last year, butane exports made up about 13% of butane demand; so far this year, it stands around 17%. US trade data shows butane export levels through Aug, which is the most recent data, are already the highest levels seen since 2014 and are just 603 million barrels shy of that high-water mark.

Shipping sources noted if export demand continues at the current clip, we could see a new record this year. Already exports set an all-time monthly record in Mar, coming in at 5.588 million barrels (180,258 b/d), according to EIA data.

Should exports be the driving force in this price strength, it is important to understand which regions are the largest consumers and whether their demand is sustainable. Similar to propane, Asia is the leading destination for US butane with its total volumes more than those combined from North America, Latin America, Europe and Africa for the year-to-date.

South Korea is the leading importer (it is the largest producer of butane canisters/cartridges), followed by China, Japan, Canada and Egypt. South Korea and China should continue to be leading importers of butane given rising LPG consumption in its petrochemical and industrial sectors; several new plants came onstream at the end of 2016 that use LPG as a feedstock rather than naphtha or gasoil, which have been the feedstocks of choice for Asian plants.

What is interesting is this year’s demand uptick from Egypt, Turkey and Indonesia, which have been peripheral importers at best in prior years. These countries’ YTD exports are already two- to fivefold over 2016 levels, reflecting a shift away from Middle East supplies (which are expected to fall on OPEC production cuts). From a price perspective, US butane is coming in at a viable discount to current Saudi contract prices making exports feasible.

US butane is also coming in at about 80% the value of Asian and European naphtha, opening up feedstock switching possibilities in those regions (See International Prices, page 1). In the short-term, another bump should be expected from Latin America in Sep due to production disruptions in Mexico from the recent earthquakes, which could linger into 1Q -- Samantha Hartke

PetroChem Wire's NGLs Week report offers weekly analysis of critical market fundamentals and US/international prices. To sign up for a free trial, e-mail:

Sign Up for RSS Feed  follow us in feedly