U.S. Propane Dehydrogenation (PDH) propylene profit margins took another leg down in July as soaring Mont Belvieu propane prices narrowed the propylene-to-propane price spread. As shown on the left-hand chart below, PDH plant margins peaked at almost 50 c/lb in March but have declined sharply since that time and currently sit at only about 10 c/lb. So, what happened to those fat profit margins in March? The right-hand chart below shows that Polymer Grade Propylene (PGP) prices have been fairly steady at around 30-35 c/lb since June while Mont Belvieu propane prices have rallied from about 55 c/gal to 72 c/gal currently. With forward prices for propane in contango, PGP prices will need to increase to boost margins. However, add the recent start-up of Enterprise’s new 1.65 B lb/yr PDH-2 plant (35 Mb/d propane demand) to the equation and the outlook for significant margin improvement for the rest of this year looks bleak.
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U.S. Propylene Margins Under Pressure; Enterprise PDH-2 Start-Up Looms
U.S. Propane Dehydrogenation (PDH) Margins Weaken
Nothing Compares 2 U - Enterprise's NGL and Petchem Distribution and Export Machine
Enterprise Products Partners doesn’t just extract mixed NGLs from associated gas at processing plants, transport that Y-grade to the NGL hub at Mont Belvieu, and fractionate NGLs into “purity products” like ethane, propane and butanes. The midstream giant also distributes purity products to Gulf Coast steam crackers and refineries, converts propane to propylene at its two propane dehydrogenation (PDH) plants, distributes ethylene and propylene, transports propane and butane to wholesale markets across much of the eastern half of the U.S., and exports a wide range of products — ethane, LPG, ethylene and propylene among them — from two Enterprise marine terminals on the Houston Ship Channel. (Another export terminal in Beaumont, TX, is in the works.) Talk about a value chain! In today’s RBN blog, we continue our series on NGL networks with a look at Enterprise’s NGL and petrochemical production, distribution and export assets.
