US Gulf Coast ethane prices continued their downward trend Tuesday, dropping to their lowest level in two months on oversupply and low demand.
May non-LST ethane fell 87.5 points to 24.25 cent/gal, the lowest since a March 9 assessment at 24.125 cents/gal.
Ethane prices have shed 3.5 cents since the last day S&P Global Platts assessed April NGL, on April 27.
Market sources pointed to high recovery rates of ethane from the natural gas stream as ethane maintained a more than $1/MMBtu, or 7-cent/gal, premium over gas from March 15 to May 11.
When ethane prices are not strong enough to cover the cost of extracting it from the gas stream and transporting it, producers can choose to reject it and sell it as natural gas.
Other sources attributed low ethane prices to a glut of ethylene resulting in record low prices and lower ethane demand.
An ethylene oversupply may have played a role in the idling of Chevron Phillips Chemical's No. 22 cracker in Sweeny, Texas, Platts reported previously. The plant cracks purity ethane but takes recycled ethane from two larger plants at Sweeny.
"It signals that the length in ethylene can no longer be solved turning off expensive layers," an NGL trader said. "It's now only an ethane turndown that can solve."