Many ethylene market insiders thought that steam cracker margins would pick up in the second half of 2023. But it looks like just the opposite with U.S. ethane cracking margins falling to the lowest level since June 2020. As shown on the chart below, ethane cracking margins (orange line) have declined from ~8 c/lb in late June to about 1 c/lb as of July 24. Ethane feedstock steam cracker margins are currently about 5 c/lb lower than normal butane (blue line) and 2 c/lb below propane (purple line) cracking economics. And not surprisingly the culprit has been higher ethane prices. Ethane prices have increased by ~15 c/gal since late June to about 38 c/gal currently, while ethylene prices have remained weak at 16 c/lb.
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- Analyst Insight
Ethane Steam Cracker Margins Weaken
Ethane cracking margins have declined from ~19 c/lb in late March to 7 c/lb as of June 26 while economics for normal butane have held up much better with a margin of about 13 c/lb currently.
- Blog
Return to the Ethane Asylum - Price Skyrockets as Supply/Demand Uncertainty Looms for the Lightest NGL
That crazy little ethane molecule is at it again. Yesterday the price blasted to 67.875 c/gal, a level last seen on January 17, 2012. Petchem cracker margins are low. Production is up, but inventories are down. A big driver of the bedlam is the price of natural gas, trading in the $7-$9/MMBtu range for the past month. But as usual with ethane, there’s a lot more happening below the surface — including high domestic demand, growing export volumes, and significant developments in downstream petrochemical markets — all shaking things up. Looking ahead, uncertainty looms, with more export capacity, ever-changing ethane rejection economics, and uneven production growth. In today’s RBN blog, we’ll leap back into the ethane market to see what’s been going on, and where ethane is headed over the next few years.
- Analyst Insight
U.S. LPG Steam Cracker Feedstock Margins Plunge
Feedstock margins for LPG cracking (propane and normal butane) have sunk deeper into negative territory to start the new year approaching natural gasoline as the least economical cracker feedstock.
