North America ethylene short-term outlook August 2017

Traders scattered across Houston are frantically calculating whether ethylene feedstocks, production, or demand has taken the hardest hit from Hurricane Harvey.  Overall we see shutdowns affecting more than 50% of total US capacity, with 400 kt of lost production over August and September.  Nameplate operating rates will average 86% over these two months.  Harvey will lead to only 300 kt of lost demand, pushing spot ethylene prices towards 30 c/lb.  Ethane fractionation spreads will falter due to record ethane stocks, sending ethylene margins 10 c/lb higher than August's levels.  Wood Mackenzie will be closely monitoring plant operating performance, with a keen eye on potential delays to the first wave of new steamcrackers.   Storm damage and manpower availability could be an issue, especially at CPCHEM's new Cedar Bayou plant.  Cedar Bayou set the continental US record for rainfall with nearly 52 inches of rain.