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Daily Wire

  

PetroChem Wire's Daily Wire provides closing prices and a summary of the day's trading activity for US ethylene, proylene, polymers and upstream NGLs markets. Begun in 2007, its olefins and polyolefins prices serve as benchmarks for a number of physical and swap contracts that trade on the CME/NYMEX Clearport system.

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Pipeline outage in Pennsylvania could raise costs for PE producers

HOUSTON, January 24, 2019 (PCW) -- A US PE producer was alerting customers today that a pipeline outage in the Northeast could drive up ethane costs along the Gulf Coast, which would have a direct impact on the cost structure for PE producers.

The letter from Ineos Olefins & Polymers USA stated that the outage of one of the two pipelines at the Marcus Hook, PA export terminal could be lengthy and will halt ethane exports from Marcus Hook.

This will result in increased ethane export demand from Houston, which has the only other ethane export terminal in North America, and could drive up costs for Gulf Coast ethylene producers.

Ethylene producers are running at cash cost due to the oversupply--so any increase on ethane cost will be immediately pushed into the ethylene market price, the Ineos customer letter said.

Ethane-based ethylene cash costs have risen to 14.8 cpp as of Wednesday, according to calculations performed by PetroChem Wire. That is up from 13.8 cpp at the start of January.

Ethane prices recently spiked in September 2018, with Mont Belvieu ethane closing as high as 61.25 cpg on September 18, 2018, resulting in an ethylene cash cost of about 25 cpp.

Spot Mont Belvieu ethane was trading in a range of 32-33.5 cpg as of midday today.

Ethane's primary use is as a feedstock for olefins plants, or crackers. US Gulf Coast ethane supply has been finely balanced in recent months because increased demand from crackers has outpaced the growth in the ethane supply infrastructure, which includes pipelines and fractionators. -- David Barry

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