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ANALYSIS: Will European naphtha’s collapse stymie incremental US ethane exports?

HOUSTON, February 9, 2016 -- Since the beginning of January 2015, the price of Northwest European naphtha has collapsed on the back of crumbling Brent crude and is now at a point where it is at or below to US ethane prices -- not necessarily the best climate for the impending start of US ethane exports to Europe.

Ethane prices, while still relatively depressed, have remained steady as US natural gas prices – ethane’s price floor – have not seen crude’s steep decline.

By the end of this month or the beginning of March, US ethane is expected to begin shipping on the Mariner East pipeline from Appalachia to Marcus Hook, Pennsylvania. From there, ethane will be transported to crackers in the UK and Norway.

However, US ethane prices, after taking into account shipping and terminaling fees, have actually taken on as much as a 8 cpg premium over NWE naphtha prices this week -- a far cry from the 74 cpg premium NWE naphtha enjoyed in February 2013 (see graph below). -– Samantha Hartke

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