US ethane, butane become preferred feedstocks

OREANDA-NEWS. May 14, 2015. Mont Belvieu, Texas, butane and ethane markets have been more active in recent weeks, gaining much of their traction on talks of petrochemical producers consuming more volumes of those feedstocks as opposed to propane.

Ethane values spiked to a high of 20.5?/USG during yesterday's trading session, a value unseen since 27 February. Meanwhile, ethane has managed to hold a strong premium to its fuel value, reaching a 1.105? premium to natural gas on 11 May.

Today, ethane values oscillated in the 19.875?/USG range, and maintained about a 0.53? premium to natural gas, while larger volumes of the feedstock traded.

Butane at the EPC terminal has seen active trade with prices firming since the first of the week. Butane reached a high of 64.25?/USG today, up from an average 61?/USG on Monday.

During the week, butane has hovered around 43.57pc, but has increased marginally each session.

As propane values have been on a steady decline in recent months, petrochemical producers have been shifting focus to the other Mont Belvieu feedstocks, enabling large quantities of cheap propane to move into storage for when propane prices will increase further down the forward curve.

Ethane consumption for cracking has increased as Williams Partners' Geismar, Louisiana, ethylene cracker came back online in March of this year.

Ethane has also gained in value as more volumes of ethane are being rejected in the US, with some forecasts pegging rejection as high as 550,000 b/d.

The continuous ethane rejection has also resulted in ethane stockpiles declining steadily since October.

Butane continues to be talked as the preferred feedstock as it is most profitable. But similar to the lighter ethane feedstock, petrochemical producers with the ability to crack vast volumes of ethane and butane are limited.