US ethylene exports won't harm margins: LYB
OREANDA-NEWS. New US ethylene capacity shouldn't depress global prices enough to harm US cracker margins, LyondellBasell chief executive Bob Patel told investors at the JP Morgan Aviation, Transportation and Industrials Conference.
LyondellBasell forecasts global cracking capacity utilization will slip under 90pc in 2018 following capacity additions in the US and elsewhere.
World-wide "it's a balanced market with the potential for being tight when there are unplanned outages or significant planned outages as we are seeing in the US," Patel said.
Yesterday spot ethylene prices at Mont Belvieu, Texas, hit 28?/lb, the highest level since August 2015, following reports of unplanned outages.
Patel said new US ethylene capacity won't push prices low enough to harm margins.
"My sense is this capacity, first of all, is not significant on a global basis, and may or may not come on exactly as predicted or indicated," he said. Today Enterprise Products Partners announced it is considering building a new ethylene terminal on the US Gulf coast in addition to the ethane export terminal expected to come online later this year.
"When you think about exports and relative prices in different regions, you need to think about oil-to-gas ratios," Patel said. "My sense is the oil-to-gas ratio will be such that the US will continue to be favored in terms of feedstock advantage, and there will be some slope to the global cost curve. If the markets are as balanced as I describe them, then even Asian markets should have some margins."
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