Trader's Corner
Click Here!

Click Here!

Click Here!

Click Here!


June 2018 cover


Petrochemical companies boost propane usage

Cost Management Solutions    
Cost Management Solutions


Recent data shows petrochemical companies are increasing propane as a feedstock this month after a sharp falloff in May.

Petrochem prop demand
Click to enlarge.

Estimates show petrochemical companies are using propane at a rate of 300,000 barrels per day (bpd) in June compared to 266,000 bpd in May. Propane moved from 13.95 percent of the total petrochemical feedstock stream in May to 15.27 percent in June.

Petrochemical companies have been favoring vastly cheaper ethane as their primary feedstock. Ethane remains the primary feedstock, but dropped from 73.7 percent of the feedstock stream in May to 72.5 percent this month. Ethane consumption is at 1.424 million bpd.

The reason for the change in the feedstock stream mix could be an improvement in the relative value of ethane to propane. Petrochemical companies are extremely sensitive to price, causing them to use cheaper feedstocks where they can. Petrochemical companies' feedstock mix also can be impacted by what products are needed to supply customers, so the price of the feedstock is not the only consideration.

Featured photo
Click to enlarge.

In 2016, ethane averaged 41.01 percent of propane. As propane inventory fell with more propane export capacity, prices improved, leaving more constricted ethane behind. That resulted in a sharp decline in ethane's relative value during the second half of last year. For all of 2017, ethane priced at just 33.63 percent of propane. In the second half of the year, the average was just 30.68 percent. Due to the relative low value, petrochemical companies were using as much ethane as possible.

Recently, ethane values have been improving against propane. The average this year has been 30.73 percent, which is just slightly better than the last six months of 2017, but ethane's value is trending upward. In January, ethane averaged just 27.58 percent of propane's value, although it is 34.99 percent this month.
It is our understanding that pipeline projects that could relieve the bottleneck from that production area will not be complete until sometime next year.

(continued below)

Find CMS on Facebook Questions? Email CMS Try a 10-day Trial of PPI
Ethane export capacity is improving, and more units that turn ethane into ethylene are being completed. That seems to be increasing ethane values, which is causing petrochemical companies to respond.

The implication for propane retailers is that petrochemical companies could demand more propane moving forward if the trend in ethane's relative value to propane continues on its current path. If that slows down the build in propane inventories, it could result in price support for propane.


Click Here!

Click Here!

Click Here!

Click Here!

Click Here!
Market Information Services

The Propane Price Insider is an email service that provides:
  • Three daily price Flash Wires
  • Periodic option quotes
  • Wednesday inventory data updates around 11 a.m. ET
  • Evening report with executive summary, weather maps and complete review of energy prices that are based on propane's Btu equivalent
For a free 10-day trial subscription by email, sign up online here or call 888-441-3338.
Unbiased Analysis

Cost Management Solutions LLC (CMS) is a firm dedicated to the analysis of the energy markets for the propane marketplace. Since we are not a supplier of propane, you can be assured our focus is to provide an unbiased analysis.

Contact us today to see if you can benefit from having the Energy Price Watchdog working for you.

Client Services

Many retailers simply don't have time to analyze the large amounts of data to make an informed purchasing decision.

We offer:

  • Detailed market recommendations on hedge and pre-buy entry points
  • Prompt market execution of hedging strategies
  • Supply cost analysis and recommendation as to effective hedging strategies
  • Large volume consideration when we place your hedges
Contact us GOT STORY IDEAS? Email Brian Richesson, Editor in Chief