Company announces plant re-start, pretty much as predicted. I figured they announce the re-start just because they announced the stoppage.
This message is really responding to your last message (there's only 2 of us on this board), but there's no reply button on the message (thank you, Yahoo) and the string was getting pretty long anyway.
You really seem to know your stuff. Certainly I don't. I used PGP generically because I can't spell propylene. But your point about the ethelyene crackers shifting to ethane is key, I think. Ethane prices have tanked even more than propane in the last year, and ethelyne crackers making up 37% of production probably added to the drop in propylene pricing.
Anyway I'm thinking that the propane/propylene pricing for Q4 will resemble Q2 rather than Q3, and things will be looking up for a while. But my real reason for buying PDH is EPD's decision to join the party. EPD supplies all of PDH's propane and I guess it's getting killed on the low prices. So it's decided to start its own PDH facility or maybe 2. It really seems to validate Petrologistics' technology and business model, at a cheaper price. I'd feel a bit better if PDH didn't have the recent history of work stoppages for technical problems, but I guess that's to be expected with any new plant.
I can drive by the plant to see if it is running. You can definitely tell by the noise. Realize also that EPD is building one of these units nearby, so PDH will have some competition. PSX is building one too in Sweeny, right on Kinder Morgan's propane product line from the Eagle Ford. I still like PDH because it is such a pure play in this. I wish WLK would spin off its ethane - ethene units into an MLP for a pure play on that.
It's usually not great when your sole supplier of propane (EPD) announces that it's building a competitive plant nearby, but EPD says its plant won't come on line until Q3 of 2015. And that plant's production is pre-sold already, so it may build another plant as well. But the new plants (I didn't know about the PSX plans) will presumably drive up the price of propane eventually, leading to a bust. But PDH has plenty of time to make money in the meanwhile.
EPD's announcement is what got me looking again at PDH. I had passed on PDH when it IPO'd, but recently bought in.
The drop in ethane (gas) vs naphtha (oil) means that ethylene crackers (whose purpose is to make ethylene not PGP) has caused those crackers to shift and use ethane thereby producing LESS PGP (on the side) via that process. So net a decline in NGLs has a double whammy effect. If reduces propane (good) and reduced ethylene-cracker produced PGP (good)....sit back and enjoy the ride.....