Production disruptions caused by Hurricane Laura have boosted ethylene prices to an 11-month high, which in turn, supported a rebound in US Gulf Coast ethane prices from two-month lows. September non-LST ethane was traded at as low as 17.50 cent/gallon in early September 4, but the was closed on the day at 19.375 cents/gallon.
The rebound came despite a lack of cracker demand after Laura disrupted power and delayed restarts of crackers in Lake Charles, Louisiana. Ethane/NYMEX natural gas frac spreads have been narrowing to $0.32/MMBtu from as high as $1.53/MMBtu on September 3. Some traders expected that ethane extraction margin would go into negative territory.
The US spot Mont Belvieu ethylene price stood at 26.5 cents/pound, the highest in 11 months and has remained relatively unchanged since August 31. Mont Belvieu spot ethylene price has surged by 18.5 cents, over 231% from a 16-year low of 8 cents/pound on April 3 amid demand destruction due to the COVID-19 pandemic. Meanwhile, spot ethylene price at Choctaw was observed at 28 cents/pound on September 3, having rebounded by 20.75 cents, or 286% since a low of 7.25 cents/pound on April 7.
