TEMPORARY DOWNTURNTags: ethylene, NLG, olefins, petchem, propylene
Most petrochemical crackers are running at relatively high operating rates amid the coronavirus pandemic, as demand for virus mitigation products requiring polyolefins remains high. In the UK, however, operations slowed recently at Navigator’s Teesside and Exxon’s Fife plants, as supplies of natural gas liquids feedstock became limited. There are some signs that feedstock production may improve soon, but the ever changing landscape in energy production could suggest that crackers may be running into jeopardy.
Global ethylene loadings rose 16% in October from the prior month. That was the highest in two months, and near the highest on our records reached in June 2019. Loading gains were made in countries such as Saudi Arabia, the UAE and Portugal, but the UK stands out for its nearly 80% decline. UK loadings fell in September, and are only 2,622 Mt so far this month. Weakness was seen at Exxon’s Fife and Navigator’s Teesside terminals, where October loadings declined 76% and 82% respectively from September.
Both facilities may have been impacted by a pullback in NGL production from the North Sea, which has recently carried out maintenance that was deferred from earlier this year due to Covid. Maintenance is expected to wrap up this quarter, which could soon boost production of NGLs used at both facilities. Fife sources almost all of its NGLs from the North Sea rather than from waterborne deliveries. Increases in North Sea production may not be a certainty, however, given the changing economics of drilling this year, and increased competition from other countries.
At Teesside, the plant sources a lot of its feedstock from LPG loaded mostly in the US. Since the beginning of 2019, 85% of its LPG supply was from the US, and the majority of that came from Enterprise in Morgan’s Point and Houston. Recent tropical activity on the US Gulf Coast has hampered LPG loadings destined for petrochemical crackers as a result. US-sourced LPG discharges at Teesside fell from 30,000 barrels per day in August to 11,000 bpd in September and to zero in October.
That should soon turn around, as export terminals on the Gulf Coast recover. Belgium receives the lion’s share of ethylene from the UK, and sourced more of it from other countries since October. The US delivered 6,749 Mt in October, in what was the first in two months, while the Lavera plant in France delivered 9,184 Mt this month. There were 3,543 Mt of ethylene discharged from Italy in October – the first from that country in a year. Germany discharged more ethylene from the Dow Terneuzen plant in the Netherlands in October to make up for lost supplies from the UK.
About The Author
Tom Pawlicki is a Senior Oil Market Analyst at ClipperData, and he specializes in reporting on LPG and Olefins.