Recently, ethane margins have improved greatly due to the return to operation of all ethane-cracking capacities after several facilities were offline during the past few months.
Conway saw ethane margins improve some 77% during the past 30 days due to the restart of Equistar Chemical Co.’s ethylene plant in Morris, Illinois, which helped to narrow the Midcontinent price with the Gulf Coast price.
However, Mont Belvieu remained a far stronger market for ethane due to the huge amount of capacity in the region. En*Vantage reported that, by the start of July, ethylene plants in the region were operating at a combined 95% capacity.
En*Vantage anticipates the market for ethane to tighten as the summer continues, as August supply levels fall to 19 days of available supply. According to the Energy Information Administration’s monthly inventory numbers for ethane, levels in April increased 859,000 barrels (bbl.) to 21.441 million bbl. However, this was down from the April 2010 storage level of 27.081 million bbl. The April 2011 days-of-supply were 24 days compared to 34 days in April 2010.
“Looking forward, we are looking for ethane inventories to increase in May by 600,000 bbl., but start declining in June, July and August. By the end of August, we expect ethane inventories to be at 18.6 million bbl. If our forecast is correct, this would indicate a reasonably tight ethane market,” the company reported in its Weekly Energy Report for June 30.
Wells Fargo Securities reported that the undersupplied ethane market is primarily due to feedstock switching by petrochemical producers away from heavier crude oil-based products to ethane.
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