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PetroLogistics LP Message Board

  • jrad52 jrad52 Apr 25, 2013 12:19 PM Flag

    Conference call

    I'm a little surprised that PDH isn't dropping today. On the cc, management said the propane to propylene spread was 50.4 cents for the Q but it has dropped quite a bit in April. They mentioned a spread of 36.4 cents so far in April. The problem is that US propylene prices spiked in January and February (good for PDH in Q1) to the point that US prices, which were the lowest in the world in H2 of 2012, rose to become the highest in the world in Q1 2013. US prices averaged 75 cents in Q1, while Asian and European prices were in the low to mid 60 cents range. Now, US prices have dropped to the world average. At the same time, propane prices have risen. Not so much - they are around 93 cents/gallon. But they talked about a race in propane pricing - EPD has just completed an export facility for propane, and more are in construction. This should have the effect of increasing propane prices by increasing demand. On the other hand, there are several new fractionation plants coming on line this year, which should increase the supply of propane, dropping prices. Management didn't seem too concerned, they just said they didn't know who would win the race, so they weren't going to project propane prices.

    But a 36.4 cents spread still is better than the spread in late 2012, so I don't think we are going back to distributions in the 20 - 30 cent range. As a pure guess, I would think we're somewhere in the 30 - 40 cents per Q range. So not terrible, but not great, either.


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