The Mont Belvieu iso-normal price spread reached a year-to-date high of 34 cents/gal on November 3, the widest differential since hitting 47 cents/gal on August 23, 2022. As the left-hand chart below illustrates, the spread between iso and normal can swing widely depending upon the relative supply/demand balances for the two products. For the first nine months of this year the differential ranged between minus two cents/gal and 28 cents/gal, averaging seven cents/gal, while in 2021 it was barely above zero. So what has been driving the big jump in the spread between isobutane and normal butane lately? The main culprit has been strong isobutane prices which have been bolstered by tight supply/demand balances. As shown on the right-hand chart below, the OPIS Mont Belvieu ("MB") non-TET isobutane price (red line) has rallied from ~90 cents/gal on October 12th to about 114 cents/gal currently, while normal butane prices (blue line) have barely budged. On the supply side, Enterprise’s three isomerization (“Isom”) units in Mont Belvieu continue to run full out with operating rates of 97% during the third quarter and 100%+ during the second quarter (per Enterprise 10Q filings). And its not just the Gulf Coast Isom operators who are reaping all of the profits with the Conway iso-normal spread hitting a whopping 43 c/gal on November 6th. It remains to be seen how long the differential will stay elevated, but it is unusual for it to be this wide at the beginning of winter.
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