Trader's Corner

DIGITAL EDITION

LP Gas May 2019 Cover (Photo: Rodney Choice, choicephotography.com)

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THIS WEEK'S TOPIC:
PROPANE DEMAND

Petrochemical demand
for propane decreases

By MARK RACHAL
Cost Management Solutions

Petrochemical companies are using less propane, contributing to lower domestic demand.

Click to enlarge. Image: Cost Management Solutions

Petrochemical companies continue to shun propane for ethane. The chart above shows how much propane petrochemical companies are demanding. The trend is to demand less. In May, they were on pace to consume 265,000 barrels per day (bpd). The chart also shows propane’s total percentage of the feedstock stream.

Ethane was accounting for 76.6 percent of the feedstock in May, compared to 13.4 percent for propane.

The table below illustrates just how dominant ethane has been as a petrochemical feedstock.

Click to enlarge. Image: Cost Management Solutions

The percentages have been holding fairly steady over the last 12 months.

The U.S.-China trade war is hurting U.S. NGL exports in general. However, a major deal for China to buy ethane is in jeopardy, which is hurting ethane specifically. A major cargo originally sent to China was recently diverted to Europe.

Ethane prices averaged just 39.67 percent of Mont Belvieu LST propane’s price in May. As long as ethane remains a relatively low-priced feedstock option, petrochemical companies will continue to prefer it over propane, keeping their consumption of propane low. That will contribute to low domestic demand for propane and be bearish for prices.


	WHAT IS COST MANAGEMENT SOLUTIONS?

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.

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.

Dale G. Delay, 888-441-3338 ddelay@propanecost.com
Mark Rachal, 888-441-3338 mrachal@propanecost.com

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