January 2012

With higher weather temperatures in the U.S. and less heating demand overall, natural gas prices this month fell all the way to $2.33 MMBtu.

Just as one polymer is heading up, the cost to make another, Polyethylene in this case, is falling dramatically with the price of ethane and natural gas.  These diverging themes in energy are leading to a very choppy start to 2012.

As natural gas started to fall, ethane, the preferred feed in ethylene production soon followed.

Watching natural gas and ethane prices helps to understand what will affect producer margins.  Already in the natural gas space, companies like Chesapeake Energy and ConocoPhillips have cut back production leading to a recent increase in price.  (read full article)