Railcar &PetroChemical Update:US Chemical Shipments up 6.1%.Ethane up 1c/gal to 27c/gal

Railcar loadings 4-week moving average +6.4%. Weekly loadings up 2.1%

Railcar loadings 4-week moving average +6.1%. Weekly loadings up 6.9%

Railcar loadings 4-week moving average +5.3%. Weekly loadings up 6.1%.

    The 4-week moving avg of chemical railcar loadings increased 6.4% in
Week#44(ended 10/28/2017) vs. a 6.1% increase the prior week. Loadings
YTD areup 0.8%. Chemical railcar loadings represent 20% of total US
chemicalshipment tonnage (followed by trucks, barges, and pipelines),
offering a trendof broader chemical industry activity and demand. The
more volatile measureof weekly loadings increased 2.1% YoY (versus a
6.9% increase in the priorweek) and decreased 2.6% sequentially (vs. a
0.5% decrease in the prior week).

    The 4-week moving avg of chemical railcar loadings increased 6.1% in
Week#43(ended 10/21/2017) vs. a 4.7% increase the prior week. Loadings
YTD areup 0.8%. Chemical railcar loadings represent 20% of total US
chemicalshipment tonnage (followed by trucks, barges, and pipelines),
offering a trendof broader chemical industry activity and demand. The
more volatile measureof weekly loadings increased 6.9% YoY (versus a
6.2% increase in the priorweek) and decreased 0.5% sequentially (vs. a
0.7% decrease in the prior week).

    The 4-week moving avg of chemical railcar loadings increased 5.3% in
Week#45 (ended 11/04/2017) vs. a 6.4% increase the prior week. Loadings
YTD areup 0.9%. Chemical railcar loadings represent 20% of total US
chemicalshipment tonnage (followed by trucks, barges, and pipelines),
offering a trendof broader chemical industry activity and demand. The
more volatile measureof weekly loadings increased 6.1% YoY (versus a
2.1% increase in the priorweek) and increased 5.1% sequentially (vs. a
2.6% decrease in the prior week).

    Ethane prices roughly flat at 27c/gal. Propane down 3c/lb to
95c/gal

    Ethane prices up 1.2c/gal to 27.0c/gal. Propane up 7.6c/lb to
98.0c/gal

    Ethane prices roughly flat at 27 c/gal. Propane up 2 c/lb to 97
c/gal.

    Ethane prices fell a modest 0.2c/gal last week to 26.8c/gal (vs its
fuel value of19c/gal). While US ethane supply/demand (s/d) fundamentals
remain loose,ethane rejection, which peaked at 500-600k bpd in 1H16, has
declinedfollowing the September ’16start-up of Enterprise Products 200k
bpd ethaneexport facility in Houston. Starting in Q4’17, we expect US
ethane s/dfundamentals to tighten further, driven by 600k bpd of new
demand from thestart-up of 8greenfield ethylene crackers in ’17-’19. As
the market tightens,we expect ethane to trade toward its historical
premium of ~10c/gal vs its fuelvalue, with the premium reflecting
fractionation, transportation and storagecosts. Based on DB’s ’17US
Natural Gas price forecast of $2.93/MMBtu, weestimate ethane prices will
likely move toward 30c/gal by year-end ‘17.

    Ethane prices rose 1.2c/gal last week to 27.0c/gal (vs its fuel
value of 20c/gal). While US ethane supply/demand (s/d) fundamentals
remain loose,ethane rejection, which peaked at 500-600k bpd in 1H16, has
declinedfollowing the September ’16start-up of Enterprise Products 200k
bpd ethaneexport facility in Houston. Starting in Q4’17, we expect US
ethane s/dfundamentals to tighten further, driven by 600k bpd of new
demand from thestart-up of 8greenfield ethylene crackers in ’17-’19. As
the market tightens,we expect ethane to trade toward its historical
premium of ~10c/gal vs its fuelvalue, with the premium reflecting
fractionation, transportation and storagecosts. Based on DB’s ’17US
Natural Gas price forecast of $2.93/MMBtu, weestimate ethane prices will
likely move toward 30c/gal by year-end ‘17.

    Ethane prices rose a modest 0.1 c/gal last week to 26.9 c/gal (vs
its fuel valueof 21 c/gal). While US ethane supply/demand (s/d)
fundamentals remain loose,ethane rejection, which peaked at 500-600k bpd
in 1H16, has declinedfollowing the September ’16 start-up of Enterprise
Products 200k bpd ethaneexport facility in Houston. Starting in Q4’17,
we expect US ethane s/dfundamentals to tighten further, driven by 600k
bpd of new demand from thestart-up of 8 greenfield ethylene crackers in
’17-’19. As the market tightens,we expect ethane to trade toward its
historical premium of ~10c/gal vs its fuelvalue, with the premium
reflecting fractionation, transportation and storagecosts. Based on DB’s
’17 US Natural Gas price forecast of $2.93/MMBtu, weestimate ethane
prices will likely move toward 30 c/gal by year-end ‘17.

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