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Spot NGL prices on a bullish track in 2H 2017

HOUSTON, June 20, 2017 (PCW) -- Gulf Coast spot NGL prices should move upward for the remainder of this year, rising between 0.625-3.375 cpg or 0.6-7.5%, from current-month levels, according to PetroChem Wire’s forward curves. While seasonal demand for most NGLs kicks in during the latter half of the year, there are additional supportive fundamentals that will come into play, namely petchems cracking demand and exports.

Ethane is leading the pack in terms of its expected price increase through year’s end, coming largely on the back of increasing petrochemicals cracking demand and exports. New cracking demand should cumulatively up ethane demand by 208,000 b/d, or 25% between January 2017 to January 2018, according to PCW estimates.

Ethane exports, meanwhile, are up 102% to 5.297 million barrels (170,871 b/d) year-on-year as of March. US ethane exports should increase substantially by year’s end as total dedicated ethane-capable vessel capacity increases to 6.41 million bbls, roughly equivalent of supplying a 3.3 billion lbs/yr ethane cracker for 71 days.

The demand milestones for ethane include:

n Dow’s 3.3 billion lbs/yr Freeport olefins unit expected to come online in 3Q, which could consume some 90,000 b/d of ethane.

--ExxonMobil’s 3.3 billion lbs/yr Baytown cracker is expected to start up by year’s end with full production capacity rates achieved in early 2018. It should consume about 90,000 b/d of ethane.

--Indorama’s 968 million lbs/yr brownfield facility at Lake Charles is also expected to go into service at the end of the year.

--July delivery of Sabic’s Gaschem Orca, capable of transporting 360,000 bbls.

Propane and normal butane are receiving bullish support from exports, which have dramatically tightened inventories. Despite frequent reports of cancellations, propane exports have remained at high levels. Demand from Enterprise Products Partners’ new 1.65 billion lbs/yr PDH unit at Mont Belvieu in 3Q is expected to increase propane consumption by 35,000 b/d, and will represent 36.8% of PDH demand by year’s end.

Butane exports, while also at historic highs, have been more vulnerable to regional outages and shortages in Europe and the Mediterranean. But it looks set to receive its seasonal demand boost from the winter gasoline blend, as is typical. -- Samantha Hartke

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