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.

Butane exports to Asia to rise on open arb, product scarcity; could support US prices

HOUSTON, March 28, 2017 (PCW)-- As noted in last week’s issue of NGLs Week, spot normal butane is entering the typically low-demand summer gasoline blending season at a nearly three-year high, despite recent sharp market corrections. One of the supportive price drivers of late has been butane exports, which look set to increase due to open arbs to Asia amid rising Chinese and South Korean demand.

Butane exports in years past have typically come in at 13% of overall demand with gasoline blending always taking the lead. Last year, according to PetroChem Wire’s analysis of industry and US trade data, butane exports came in at nearly 15% of demand.

Last year’s uptick was due to a 4Q surge in exports to Europe amid a regional product scarcity, and a steady build in Asian appetite during the course of the year. A drilldown into US trade data shows that in 2016, China and Japan were the top importers of US butane, following by exports to Canada via pipe and rail.

Shipping sources noted the increasing Far East appetite for butane was due to production cutbacks in the Middle East, which should persist at least through year’s end. Global butane forward curve assessments show the US-Asia arb remaining open through August (see below).

However, support from Asian demand has led to the arb to Europe slamming shut, which could prove a more bearish influence on US spot prices. It should be noted, however, that European exports made up about 6% of US butane exports last year, while Asia came in at a heftier 44.7%, so barring another significant European product scarcity, the effects of a possible European export shortfall should be limited.

Last year as well, butane exports hit a record high of 4.598 million barrels (152,200 b/d) in May and had risen year-over-year some 9.5% to 39.138 million barrels (107,227 b/d). Market sources said they saw more evenly split export cargoes moving from US ports; typically, LPG export cargoes were 85% propane, 15% butane.

Market chatter regarding European butane exports in 1Q has still been quite robust with a March cargo recently going at about 92% of the European naphtha value, shipping sources said. Typically, butane cargoes tend to get fixed at 86-90% of European naphtha. Asian buyers, meanwhile, were already discussing May cargoes.-- Samantha Hartke

Sign Up for RSS Feed  follow us in feedly