Navigator CEO: U.S. ethylene exports fall, producers eye restocking

On August 17, Henry Deans, CEO of Navigator Gas, said that the freezing weather on the U.S.
Gulf Coast in mid-February and the subsequent operational problems squeezed production, resulting in a decline in U.S.
ethylene exports and a shift of export focus from Asia to Europe.
Because U.S. producers are focusing on replenishing inventories
.

"While production efficiency has improved, it has not risen as quickly as expected, so it will take some time to replenish ethylene inventories," he said on the company's second-quarter 2021 earnings call
.

"This situation, combined with production stalls, low cracker operating rates, and strong domestic demand and pricing, has made domestic supply better than exports, which has had an overall impact on our shipping business," Deans said
.

Navigator is a 50% partner of Enterprise Products Partners' 1Mt/yr ethylene export terminal on the Houston Ship Channel
.

In mid-February, freezing brought persistent low temperatures to the U.S.
Gulf Coast and much of the U.S., forcing more than 70% of U.S.
40 million t/y ethylene capacity offline within weeks
.

"Subsequent production headwinds continue into the third quarter of 2021 and show no signs of abating," Deans said
.

He said U.S.
ethylene inventories remained at five-year lows during the hurricane season and producers remained focused on building up inventories
.
August and September tend to be the months most likely to develop and hit the U.S.
Gulf Coast during the June-November U.S.
Atlantic hurricane season
.

U.S.ethylene prices swing sharply as production halts after freezing weather

In mid-April, spot U.S.
ethylene prices reached 2021 highs at 64.25 cents/lb FD Monte Bellevue and 68 cents/lb FD Choctaw
.
S&P Global Platts data showed that prices fell to 26.5 cents/lb and 27 cents/lb by mid-June, but rebounded to 55 cents/lb by mid-July and 58.25 cents/lb
.

Platts data showed that in early July, the U.S.
ethylene export price fell to $834.51/ton, but on July 16, the price soared nearly 42% to $1,185/ton due to multiple outages of crackers
.
Ethylene export prices were last assessed on Aug.
16, at $1,134/t FOB
.

Strong U.S.
ethylene demand and prices have weighed on export volumes amid volatile ethylene arbitrage, Deans said
.

"Although we are now well into August, the expected rebound in export volumes and the reopening of the U.S.
to Asia ethylene arbitrage have yet to materialize," Deans said
.

Data show that CFR Far East and CFR Southeast Asia ethylene prices were last assessed on August 16 at $1,243.5 per ton
.

Oeyvind Lindeman, chief commercial officer at Navigator, said volatility in U.S.
ethylene prices suggests the market is "trying to get back to normal" as domestic buyers pay to build inventories during the hurricane season
.