casts spot prices for refinery-grade propylene will average
21-24¢/lb, while polymer-grade propylene spot prices will
low-cost feedstocks and ethylene producers will continue to
operate with maximum light feeds.
Production costs for heavy feeds will be lower in second-half 2015, but the decline in spot ethylene prices during first-half 2015 squeezed margins for natural gasoline to
5-8¢/lb in second-quarter 2015 vs. 25-30¢/lb in second-half
2014. In the best case scenario, spot ethylene prices will remain steady at 30-35¢/lb during second-half 2015. If ethylene inventory reaches a surplus level, however, spot prices
may fall as low as 20-25¢/lb.
The outlook for propylene is bleaker. Refinery crude runs
and FCCU feed rates in the US Gulf Coast and Midcontinent will decline in September or October but will rebound
in November and December. Refinery-grade propylene production will remain near peak-seasonal levels until first-quarter 2016. At the same time, coproduct supply likely will
be 1.0-1.5 million lb/day less in fourth-quarter 2015 compared with the third quarter, but propylene inventory in reportable Gulf Coast storage will remain above the normal
range. Based on these considerations, Petral Consulting fore-
Daniel L. Lippe ( email@example.com) is president of Petral Consulting Co., which he founded
in 1988. He has expertise in economic analysis
of a broad spectrum of petroleum products
including crude oil and refined products, natural
gas, natural gas liquids, other ethylene feedstocks, and primary petrochemicals.
Lippe began his professional career in 1974
with Diamond Shamrock Chemical Co., moved
into professional consulting in 1979, and has served petroleum,
midstream, and petrochemical industry clients since. He holds
a BS (1974) in chemical engineering from Texas A&M University
and an MBA (1981) from Houston Baptist University. He is an
active member of the Gas Processors Suppliers Association and
serves on GPA’s NGL Market Information Committee.
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