Insatiable demand for all things plastic has ethane skyrocketing
https://www.houstonchronicle.com/business/energy/article/Insatiable-Demand-for-All-Things-Plastic-Has-16342537.phpJuly 27, 2021
Ethane, a key component in plastic production, is trading at a nearly two-and-a-half-year high in the U.S., with demand surging as global economies recover from last year’s slump.
Prices for the fuel, which is a byproduct of natural gas processing, have climbed 57 percent this year to 33 cents per gallon Monday in Mont Belvieu, Texas, the main trading hub for natural gas liquids in the U.S. Further stoking the rally is the fact that output of the fuel has stalled alongside oil and natural gas drilling, with drillers continuing to favor capital discipline over output growth.
The higher price of ethane also threatens to drive up plastics prices, adding to widespread concerns about inflation. It comes as companies ranging from Exxon Mobil Corp. and Dow Chemical Inc. spent years investing billions in plastic manufacturing in the U.S. on the assumption that access to low cost ethane as a result of shale gas production would be available for the foreseeable future.
“Gains in ethane feedstock may eventually cause the overall price of plastics to move higher as manufacturers pass along the higher feedstock costs,” says Jason Miner, senior global chemicals analyst at Bloomberg Intelligence. “With strong demand during the pandemic showing plastics remain critical to consumers, a cost-driven boost in prices will likely keep contributing to inflation on store shelves.”...
