In only nine weeks, the Mont Belvieu ethane-to-gas ratio has been crushed, falling from 1.37X in late September to average 0.88X during the short Thanksgiving week — signaling the prospects for higher ethane rejection across much of the U.S. (see right graph). The ratio, which compares Mont Belvieu ethane prices to Henry Hub natural gas on a BTU basis, underscores the spotlight that has been on ethane this year.
This summer, the U.S. Department of Commerce temporarily halted ethane exports to China during the tariff skirmish, sending ethane spot prices plunging into the teens on fears of severe oversupply. But that dispute was resolved and shipments resumed, with a boost from new export capacity from Enterprise and Energy Transfer. By the August-September timeframe the ratio had soared.
But it did not last long. High ethane inventories and a weak petrochemical market (the destination for feedstock ethane) has held ethane prices relatively flat since September while the price for natural gas is up by more than 50%. That is why the ratio was below 1.0X for the entire month of November, encouraging ethane rejection.
