Petchem margins for ethane feedstocks in Gulf Coast steam crackers have plunged to about 6.5 cents per pound (c/lb) — the lowest level this year and the weakest since September 2023. That’s a 66% drop from late July, when margins were nearing 20 c/lb. Ethane prices have been pushed higher by surging natural gas values, which are up more than 80% over the past three months, making ethane rejection more attractive when gas prices significantly exceed liquid-ethane values — as they do today.
At the same time, prices for key petrochemical steam cracker products such as ethylene and propylene remain soft amid a sluggish global petchem market. The combination of strong gas prices and weak product prices is crushing cracker economics. Ethane makes up about 85% of the total U.S. cracker feedslate.
Note in the left graph below that the ethane margin has averaged 15 c/lb with a high of 31.5 c/lb in 2021 and a low of 6.8 c/lb in 2018.
