The most important end-use markets for ethylene and propylene are production of polyethylene and polypropylene.
US production of polyethylene and polypropylene has been
surplus to domestic demand for at least 30 years, and export
markets have always absorbed the surplus in US supplies.
Export sales, however, were generally 20-25% of domestic
production for polyethylene and 15-20% for polypropylene.
With this article, we expand the scope of the series to include an overview of US exports of the industry’s primary
As petrochemical companies expand ethylene and PDH
plant capacities, the US will triple or quadruple its polyethylene exports to destinations other than Canada and Mexico, as well as double or triple its polypropylene exports.
Braskem Idesa SAPI, a 75-25 joint venture of Braskem
SA, Sao Paulo, and Groupo Idesa SA de CV, Mexico City, is
nearing completion of its long-planned Etileno XXI petrochemical complex in the Coatzacoalcos-Nanchital region of
the Mexican state of Veracruz (OGJ, July 7, 2014, p. 90; July
1, 2013, p. 90; OGJ Online, May 12, 2015).
The ethane-based complex, which is scheduled to be
commissioned in September 2016, will expand Mexico’s
ethylene and polyethylene production capacity by 2 billion
While US exports of polyethylene to Mexico in 2014 averaged 2. 3 billion lb/year, once Etileno XXI reaches full-pro-duction capacity, Mexico’s supply shortfall will shrink by up
The Braskem-Idesa venture will be the first in a series
of new polyethylene production capacity increases that will
radically transform the US petrochemical industry’s market
According to US International Trade Commission (ITC) statistics, US exports of polyethylene (high-density polyethylene, low-density polyethylene, and linear low-density polyethylene) during 2010-14 were relatively constant within a
range of 18-20 million lb/day, with 45-50% of those exports
moving to Canada and Mexico. US polyethylene exports
during 2013 averaged 19. 4 million lb/day.
grade propylene supply tracks seasonal variations in refinery
crude runs and FCCU feed rates. Seasonal variations in refinery crude runs and FCCU feed rates are reasonably predictable, and propylene supply-demand balances are usually
tighter in winter than in summer.
Propylene price relationships vs. unleaded regular gasoline vary directly with seasonal variations in the propylene
Under normal market conditions, propylene in reportable US Gulf Coast storage facilities varies by ±25% of the
midrange of long-term historic inventory levels. Occasionally, however, inventory levels fall outside the historic range.
When inventory in reportable storage at the Gulf Coast increases to more than 770 million lb, spot prices for refinery-grade propylene tend to decline and premiums vs. unleaded
regular gasoline weaken.
In October 2014, propylene inventory in reportable storage was 455 million lb, which was at the bottom of the historic range. According to EIA statistics, during the next 6
months, inventory of refinery-grade propylene in Gulf Coast
storage increased by 415 million lb to stand at 870 million
lb on May 1, about 100 million lb above the historic range.
EIA’s weekly statistics indicate propylene inventory in reportable Gulf Coast storage increased to 950-980 million lb
during May-June and was 960-975 million lb as of July 1. At
this level, propylene inventory was about 180-200 million
lb (25%) more than the high end of the historic range. Since
refinery grade propylene production was at its seasonal peak
and inventory was already near its historic record high of 1
billion lb, bearish pressures on propylene prices increased.
According to PetroChem Wire, spot prices for refinery-grade propylene were 41¢/lb in February 2015 vs. 40¢/lb in
December 2014 and 36¢/lb in January 2015. As production
of refinery-grade propylene recovered and inventory continued to rise, spot prices fell by about 10¢/lb during March-June and by an additional 4-5¢/lb in July. Refinery-grade
propylene prices were 29¢/lb in June and 23-24¢/lb in July.
During first-quarter 2015, refinery-grade propylene prices were 14¢/lb more than unleaded regular gasoline prices
before falling 2¢/lb below parity to unleaded regular gasoline
prices in May and to a discount of 4. 5¢/lb below gasoline in
June. The swing from a premium of 15¢/lb in January to a
discount of almost 5¢/lb in June was the result of the seasonal increase in supply and the growing inventory surplus.
In first-quarter 2015, the contract benchmark for polymer-grade propylene was 49. 7¢/lb. Contract settlements fell
by 9¢/lb during second-quarter 2015 to 40¢/lb in June and
to 36. 5¢/lb in July. Premiums for contract polymer-grade
propylene prices vs. refinery-grade propylene were 9-13¢/
lb in first-quarter 2015, with an average premium of 10. 9¢/
lb for the quarter. Contract polymer-grade propylene’s price
premium to refinery-grade propylene rose to 13¢/lb in April
before weakening to 10. 8¢/lb in June.
REFINERY PROPYLENE PRODUCTION Table 5
GulfCoast Louisiana areas Total
2015 ––––––––––––––––– Million lb/month –––––––––––––––––
January 599.7 566.2 377.4 1,543.3
February 525.5 454.1 325.0 1,304.7
March 573.6 372.9 391.9 1,338.3
April 600.0 486.5 423.3 1,509.7
May 575.4 593.6 443.5 1,612.5
June 602.2 582.3 379.3 1,563.8
Source: EIA Petroleum Supply Monthly, Petral estimates