LyondellBasell expects rising US natural gas liquids (NGL) feedstock costs, including ethane, propane and butane, to weigh on future ethylene margins.
The NGL complex mostly rose in the third quarter, partly because LPG supplies were constrained by disruptions to flows through the strait of Hormuz, executive vice president Kim Foley said during LyondellBasell's earnings call on 30 October.
Average third quarter ethane spot prices increased by 14pc from the prior quarter to 24.31¢/USG according to Argus pricing data, butane posted a 2.6pc increase while propane fell by 5.7pc.
Rising demand, higher exports and tighter supply across the NGL complex sent US Gulf Coast feedstock costs sharply higher in October, with ethane averaging 30.17¢/USG, up 24pc from the third-quarter average. Propane surged 41pc and butane jumped 56pc.
"In the short-term, we think ethylene margins will compress as most of the US NGLs, whether that's ethane, butane and propane, are continuing to become more expensive," Foley said.
Ethane accounted for between 75-80pc of the raw materials used in LyondellBasell's North American crackers in 2025 and 2024. Foley said US ethane exports should continue to rise as additional very large ethane carriers (VLECs) enter service and Chinese demand strengthens.
However, two new US fractionators expected to come online in the fourth quarter should support incremental ethane supply.
The reconstruction and expansion of Oneok's 210,000 b/d fractionator in Medford, Oklahoma, is still on schedule, with the first phase of 100,000 b/d expected to be finished in mid-December, and the second phase of 110,000 b/d in early 2027. Targa's 150,000 b/d fractionator 12 in Mont Belvieu, Texas, should also be operating by the end of this year.
LyondellBasell's North American crackers operated at about 90pc of capacity in the third quarter and are expected to maintain that rate this quarter. The company's third-quarter operating rate fell to 85pc because of a turnaround at its Clinton, Iowa, cracker.
LyondellBasell plans to finish maintenance at its Lake Charles, Louisiana, polypropylene site in the fourth quarter. Operating rates are forecast at 85pc for the quarter.
