Despite substantial declines in naphtha prices, ethane imports remain attractive

10-Nov-14

Ethane imports remain attractive despite the recent decline in naphtha prices, Borealis CEO Mark Garrett said in an interview with Platts. "We still see value for ethane imports but at a more reduced level because of the naphtha drop," he said. Naphtha values have recently plummeted to U$636.50/mt CIF NWE, a low since July 27, 2010, tracing crude oil's slump to four year lows. Meanwhile, ethane prices are currently trading at US$176.22/mt at one month highs. Ethane therefore remains the more attractive feedstock. Borealis said that having European ethane options, or not a complete reliance on US ethane, was preferable."We think US ethane is attractive, but prefer our balanced position of Statoil and US, rather than 100% exposure to the US. We don't want to [entirely] expose ourselves to a market that is many kilometers away," Garrett said. Borealis, in August, had signed a 10-year deal to receive ethane from US gas fields, making it the second European company to sign deals to buy US shale gas for cracking. The gas, bought from US' Antero Resources, will be cracked in its flexible steam cracker in Stenungsund, Sweden. Earlier in the year, Borealis also announced an ethane supply contract with Norwegian energy company Statoil for its Stenungsund plant.