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ANALYSIS: Heavy turnarounds could have mixed results on ethane, ethylene
HOUSTON, March 24, 2016 (PCW) -- Ahead of what is expected to be a heavy cracker turnaround season in 2Q, spot ethylene prices have surged nearly 25% since the beginning of March. Spot ethane, meanwhile, has risen about 33%, thanks to natural gas futures’ 12.5% recovery during the same time frame (see graph below).
The second quarter is expected to see several units go down for turnarounds – such as LyondellBasell’s unit at Channelview, Westlake’s Petro-1 cracker at Lake Charles, Ineos’ Chocolate Bayou plant and Dow’s Plaquemine unit in Louisiana, among others --- resulting in a cumulative production loss of about 30 million lb/day of capacity. These outages could also result in a cumulative demand loss of of more than 200,000 b/d for ethane and about 95,000 b/d for propane. CP Chem’s Sweeny 24 began its maintenance on Thursday and spot ethylene prices rose 3.25 cpp, or almost 12%, this week alone.
A similar situation occurred in 2H 2014, when several crackers went down for both planned and unexpected outages, putting operation rates between 84.03-92.86% of total capacity. -- Samantha Hartke
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