Ethylene - Slowdown & Cost of Production

​As I write this blog, let me start by saying that hope everyone is staying safe and healthy!
With double whammy of demand destruction (impact of pandemic and efforts to slow the spread) and oil supply/price war, the ethylene cost of production curve has turned-on-its-head.

• European naphtha cracking is lowest cost of production
• Even in US, naphtha or butane cracking is seeing lower cost of production as compared to ethane cracking

These trends may not represent long-term expectations but highlight some of the obvious issues around short-term volatility and feed flexibility.
The main issue, crackers are facing and may continue to face, relates to demand destruction and the decisions to run at turn-down or shutdown some of the facilities.
There is no silver bullet to address the challenges that each of the owners and operators face. There are specific knobs that each facility or company-wide operations can explore to minimize cost of production. At Apex PetroConsultants, we are available to discuss (pro bono phone consultation) with owners/operators about approaches and ideas for minimizing their cost of production.