US ethylene prices stable as freeze cuts cracker output

: Petrochemicals
24/01/16

The price of US ethylene has held steady today in the wake of a deep freeze that reduced production at multiple US Gulf coast crackers.

US ethylene traded three times on Tuesday morning at 19.25¢/lb for January delivery at the Enterprise Products Partners (EPC) cavern at Mont Belvieu, Texas. This was unchanged from a pair of January EPC ethylene deals on Friday, before freezing temperatures set in on the US Gulf coast. Argus also recorded one January EPC trade on Tuesday at 19.5¢/lb for dated delivery.

Some ethylene producers elected to reduce rates or shut down ahead of the freeze. Those who did will likely restart without incident later this week as freezing temperatures are expected to abate by Thursday. Crackers are far more likely to have significant damage when they shutdown unexpectedly due to loss of power or steam. But even proactive rate reductions or unit shutdowns come with their own risks for cracker operators.

Formosa Plastics confirmed that it reduced rates at its three crackers in Point Comfort, Texas, but did not shut them down. Those three crackers total 2.88mn metric tonnes (t)/yr of ethylene production, according to Argus data. For the company, keeping the units running helps maintain temperatures and allows for a quicker restart.

LyondellBasell was also heard to have reduced rates at all its US Gulf coast crackers and did not shut down any of its four Texas units, which total 4.174mn t/yr. The company did not immediately respond to a request for comment.

Ineos' two 930,000 t/yr crackers in Chocolate Bayou, Texas, reduced rates in preparation for the freeze, according to a company filing with the Texas Commission on Environmental Quality (TCEQ). Chevron Phillips Chemical, which runs six crackers totalling 5.376mn t/yr, confirmed it had reduced rates at all its plants and decoked furnaces ahead of the freeze.

Some units are heard to have shutdown entirely. ExxonMobil and Sabic's joint venture Gulf Coast Growth Ventures' (GCGV) 1.8 t/yr ethane cracker in Corpus Christi, Texas, was shut in anticipation of the freeze, according to market sources, but this was not confirmed by the company. Nova Chemical's 880,000 t/yr merchant ethylene cracker in Geismar, Louisiana, shut down in anticipation of the freeze. This cracker was scheduled to shut for a planned turnaround on 19 January and the company decided to begin that turnaround a few days earlier than planned.

One cracker that market sources say has been unexpectedly shut by the freeze is the 1mn t/yr Baystar cracker in Port Arthur, Texas, jointly owned by TotalEnergies and Borealis. Argus confirmed an unexpected loss of power for that unit's adjacent TotalEnergies refinery, which likely impacted the cracker as well. Also in Port Arthur, Motiva's 700,000 t/yr mixed-feed cracker was flaring, according to market sources. It was unclear if the nearby power outage also afffected that cracker.

ExxonMobil reported to TCEQ an unplanned shutdown of its ethylene compressor at one of its three crackers' in Baytown, Texas, resulting in flaring on Saturday. Indorama reported flaring at one of its facilities on Monday, according to the Southeast Texas Alert Network (STAN).

Many of the affected crackers co-produce propylene. Argus also confirmed that Invista's 658,000 t/yr propane dehydrogenation (PDH) unit in Houston, Texas, reported flaring this morning, likely related to the freeze. As with ethylene, the regional freeze has not affected propylene prices. US January PGP traded on Tuesday morning at 49.5¢/lb, in line with three confirmed trades on Friday at that price.

By Michael Camarda

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