The New View From Jamestown: Oil & Petrochemical Pricing


 Quote of the Day
“Without continual growth and progress, such words as improvement, achievement, and success have no meaning.”
 Benjamin Franklin

Industry Update

Written by Tom Ultsch, Vice President of TCC Midwest Market

After bouncing from lows in August below $40, crude oil pricing has declined by 50% since the fourth quarter of 2014. The current price is “hovering” around $46/BBL. Average crude pricing was around $96/BBL during 2014 and should average around $49/BBL in 2015. The main factors causing this change include increased production in North America, worldwide currency shifts and a lackluster economic outlook for China.

The fall in commodity speculation on everything from gold to oil has also had a large impact on pricing. The lower price of crude oil and lower gasoline pricing has stimulated US demand. United States gasoline demand has increased by over 500,000 BBL/day since the same time last year. The slowing Chinese economy has been offset by their increase in strategic oil reserves. These factors are helping offset excess production and have recently caused oil markets to go sideways and stay in the $45-$50/BBL range.

The lower cost of oil has significantly affected petrochemical prices. Olefin values have dropped by 30-40% since early this year, resulting in customers and suppliers closely watching their inventories. Currency changes and relatively stronger North American demand allowed US petrochemical prices to remain higher than in other areas of the world. Over the last month, this disparity has begun correcting itself and any arbitrage opportunities that existed are closing. All of these factors have masked true US demand during the third quarter of this year.

Another factor that has been driving pricing in the petrochemical industry is the dominant role that natural gas and Natural Gas Liquids (NGLs) are playing in North America. The shale gas revolution has transformed the face of the petrochemical industry over the last few years. Stable political and monetary policy has also attracted projects back to North America. This new production is starting to come online and has created more opportunity for downstream production of products. The current dip in crude oil pricing is offsetting some of this economic enthusiasm. The differential in crude oil/naptha values versus the new NGLs has decreased substantially and is causing producers to reexamine remaining with heavier feeds versus converting to lighter NGL feeds for basic olefin production. These discussions are highly dependent on propylene and butylene downstream requirements and their relative values.

 

Products Immediately Available

ChemFlexx DPHP: Bulk loads available for direct shipment

Methanol: Bulk Trucks and Railcars available in North America

Phenol: Available in Bulk and Drums

 

Upcoming Events

APLA: November 7th to the 10th in Cancun, Mexico

2015 NACD Annual Meeting: November 9th to the 12th in Bonita Springs, FL

2015 Chem Show: November 17th to the 19th in New York, NY

 

What’s happening at TCC?


Road Trip To The West:
CEO Nick Roach and his wife, Fran, spent a week travelling west to explore the sights of four different states. Highlights of their trip include visiting Mount Rushmore, Yellowstone National Park, and the Grand Tetons National Park.

Midwest Landscape | The Chemical Company

EPCA: TCC was well represented at the European Petrochemical Association (EPCA) earlier this month in Berlin, Germany. President Robb Roach was among the TCC representatives attending the five-day conference to meet with petrochemical industry professionals.

New to the TCC Team: Alex Azeredo is the Logistics Coordinator for TCC. Alex earned his bachelor’s degree at King University in Bristol, Tennessee. He now oversees freight. His responsibilities include researching reliable carriers to transport our products from warehouse to consumers.

TCC Newlyweds: Javier Fernandez and Angela Diaz were married August 29th in the Dominican Republic. Angela has been with TCC for 6 years and Javier for 5 years. Congratulations to the happy couple!

Wedding | The Chemical Company