EIA: Petrochemical companies substituting propane with ethane

Propane demand is expected to be 100,000 barrels per day lower on average this year compared with 2013 because of reduced demand from petrochemical plants, according to the U.S. Energy Information Administration (EIA).

According to EIA, higher propane prices reduced demand from petrochemical users starting midway through 2013. When propane prices increased relative to ethane prices, ethylene crackers began substituting ethane for propane. The trend continued into this year as the price spread between propane and ethane widened, EIA adds.

EIA does not expect ethylene plants to switch back to propane feedstock in 2015 because a growing ethane supply is expected to continue to lower ethane prices compared with propane. Still, EIA points out that several new propane dehydrogenation plants are expected to come online in 2015 and 2016, meaning these plants should contribute to some growth in propane use in the chemical industry.