Why petrochemical companies are consuming less propane

September 12, 2016 By and    

Recent industry data shows that petrochemical companies are consuming less propane.


In August, petrochemical companies consumed 310,000 barrels per day (bpd) of propane as part of their feedstock stream. That was down from 326,000 bpd in July. Propane was just 17.8 percent of petrochemicals, or 1.738 million bpd of natural gas liquids (NGL) consumption. Propane ran at 19.1 percent of the stream in July.

Petrochemicals were continuing to favor ethane. At 1.172 million bpd, ethane was 67.4 percent of the total feedstock stream. Butanes (7.9 percent), naphtha (5.2 percent), and gasoil (1.6 percent) made up the balance of petrochemical NGL consumption.

This past week, the U.S. Energy Information Administration (EIA) reported U.S. domestic demand for propane, which includes petrochemical and retail demand, was 1.228 million bpd. That was an increase of 442,000 bpd, or 56.2 percent, from the previous week.

Such hefty domestic demand is quite surprising given that petrochemical consumption is down. By comparison, during the same week last year (week 35), domestic demand was at 1.164 million bpd when petrochemical demand was running 417,000 bpd. If EIA has its calculations right, that means retail demand is running about 170,000 bpd higher this year than last year. That is a bit surprising, given reports that tank filling for crop drying has been light for farmers. Perhaps the demise of this crop drying season is a bit premature.

Or perhaps domestic demand is not as high as EIA is calculating. After all, it reported a 141,000-bpd drop in propane exports, which means it had to increase domestic demand to make its numbers work out. Demand is a calculated number after production, imports, exports and inventory changes are considered. A number of input sources must be correct to make the demand number accurate.

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