Hurricane Laura – Effects Still Reverberating the Global Olefin Markets

Hurricane Laura – Effects Still Reverberating the Global Olefin Markets image

Hurricane Laura – Effects Still Reverberating the Global Olefin Markets

09/14/2020 | Author: Tom Pawlicki

Some shutdowns in petrochemical infrastructure that took place before the August 27 landfall of Hurricane Laura are still in place, and the effects are reverberating through global olefin markets. US ethylene loadings so far this month are 11,642 metric tons. The hurricane struck near Lake Charles, Louisiana, and disrupted activity at several of the petrochemical plants located there including at Sasol, Westlake, Lotte and LyondellBasell. The Total/BASF plant in Port Arthur, Texas, was already shut for maintenance before the hurricane arrived. The drop in feedstock demand from these plants created an immediate reduction in feedstock prices on the Gulf Coast, with ethane dropping nearly 5 cents per gallon and propane falling more 2 cents per gallon in the week that followed the storm.  Ethylene prices rallied by around 7 cents per pound during the same period. The drop in ethane demand from the Gulf Coast’s petrochemical market may normally suggest an imminent increase in ethane exports to other plants abroad that are able to process the commodity, however, that has not taken place yet.

 

Weekly ethane exports from Enterprise in Morgan’s Point dropped from 145,000 barrels per day before the storm to 39,000 bpd in the week that included it, and have since recovered to 173,000 bpd and 237,000 bpd in the two weeks that followed. Both are below the highest level recorded this year of 304,000 bpd in the week ending March 6. Any impact on loadings is likely to be too short-term to change the delivery of long-term contracted volumes. The drop-off in ethylene exports could impact some Asian consumers such as Lotte Chemical Titan, which uses ethylene delivered at the Titan Petrokimia Nusantara Merak terminal for production of food packaging, coronavirus test kits and personal protective equipment.

 

The last US cargo to head to Southeast Asia left in July. However, the port’s last receipt of ethylene was on September 4, with a cargo from Malaysia. Any delays in US shipments will force it to rely more upon Singapore, Italy and Malaysia for supplies. The 11,642 Mt of US ethylene exported this month was a single cargo loaded aboard the MGC Navigator Orion. It is heading to East Asia, but is currently waiting to pass through the Panama Canal. Taiwan or China are the destinations with the highest likelihood, with CPC’s Kaohsiung LPG terminal in Taiwan receiving steady flows from the US this year. China has increased its offtake of US commodities this year in order to comply with the US trade agreement, with two terminals in Nanjing and one in Qingdao receiving 46,291 Mt of US ethylene in August.


About The Author

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Tom Pawlicki is a Senior Oil Market Analyst at ClipperData, and he specializes in reporting on LPG and Olefins.