S&P Global: Feedstock strength helps U.S. ethylene margins recover

S&P Global Commodity Insights analysts recently released a short-term outlook report for the North American market, saying that U.
S.
ethylene margins will recover
in the first quarter of 2023 due to the decline in ethane prices.

S&P Global said it expects U.
S.
natural gas condensate (NGL) production to increase by about 530,000 b/d, or 9 percent
, in 2022.
Among them, ethane accounts for more than half of the new volume, the source is recovered from natural gas, can be supplied with new ethaneyl cracker as raw materials, and exported
to the outside world.

According to S&P Global, in 2022, three ethane feed steam crackers will be commissioned in the United States: a 1.
8 million mt/year plant jointly built by ExxonMobil and SABIC, a 1 million mt/year unit from Beport Polymers, a joint venture between Total Energies and Borealis, and a 1.
5 million mt/year
unit from Shell.
No new steam cracking project will be put into operation in 2023, but Nova Chemicals will expand capacity by 400,000 tons/year, Ineos will expand capacity by 240,000 tons/year, and U.
S.
polyvinyl chloride producer Shintech will increase production capacity by 170,000 tons/year
.

S&P Global said ethane is also the world's preferred feedstock, and U.
S.
shipping exports of ethane remain strong
.
In the third quarter of 2022, U.
S.
ethane exports increased 26%
year-over-year.
Among them, China is the main destination, accounting for 43%; followed by Europe with 29%; 22% in India; In Mexico, it is 5%.

S&P Global Commodity Insights expects total U.
S.
domestic and export ethane demand to grow 9% to 2.
5 million b/d
in 2023.
U.
S.
ethane demand is forecast to be flat in 2024 and still has upside potential, largely dependent on global economic trends
.

However, as demand for liquefied petroleum gas (LPG) exports continues to grow, U.
S.
NGL production will continue to rise
.
As a result, ethane supply in the U.
S.
will exceed demand, resulting in ethane discards rising from an average of 821,000 b/d in 2022 to 939,000 b/d in 2023 and 1 million b/d
in 2024.
Strong LPG prices will improve natural gas processing margins, thereby reducing ethane price pressure
.