US steam cracker operators see margins jump on stronger ethylene

p>Steam cracker operators in the US saw margins from light feeds make strong gains as ethylene prices surged early this week. Spot ethylene gained over a penny/lb on Monday and over 2.5 cents/lb on Tuesday on the back of stronger ethane and increased buy interest following an unplanned outage at Shell's OP-2 steam cracker at Deer Park, Texas.

The market was heavily traded Tuesday with August trading at 39.75 cents/lb MtB Wms while September deals were seen at at 40, 40.375, 41.25 cents/lb MtB Wms. The market slowed mid-week and the ethylene price closed Thursday at 41.50 cents/lb.

Given spot ethylene was assessed Thursday at 41.50 cents/lb and ethane at 48.75 cents/gallon, profits from E/P mix gained roughly 3.50 cents to reach 20.93 cents/b while ethane margins were up a similar amount to close the week at 17.97 cents/lb. Margins from propane and butane were at 3.26 cents/lb and minus 5.83 cents/lb, respectively.

The estimate of cracker margins measures the relative gain and loss in cents/lb of ethylene produced from cracking several feedstocks. The estimate uses the current spot price and yields of the various ethylene cracker products (ethylene, propylene, butadiene, benzene, toluene, xylene,
fuel oil and LSFO) from cracking various light and heavy feedstocks (ethane, propane, butane, and an 80:20 E/P mix).

China Chemical Weekly: http://news.chemnet.com/img/articles/140/1409957_0.pdf