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High Shale Gas Production Pressurizes The Propylene Supply

High Shale Gas Production Pressurizes The Propylene Supply

High Shale Gas Production Pressurizes The Propylene Supply

  • 11-Aug-2022 4:04 PM
  • Journalist: Jung Hoon

Due to the accelerated speed of shale gas production in North America owing to the high demand from Europe, significant amounts of natural gas from shale and other unconventional sources are generated with ancillary natural gases like ethane and propane. These extra natural gas liquids (NGLs) are diminishing the amount of North American propylene readily available, making the ethylene supply chain less competitive. The propylene sector is observing a shift in the dynamics of feedstocks elsewhere in the world as the supply of propylene in North America becomes more constrained. Compared to the cracking of heavy liquids, the cracking of light feedstocks yields much less propylene as a co-product. Due to the decrease in American propylene production from ethylene crackers, propylene is costlier than ethylene now, which occurs after a decade.

Some operators are embracing on-purpose propylene technologies, which enable them to generate large amounts of propylene by using alternative feedstocks like coal and natural gas liquids in order to handle the shifting feedstock situation and deal with the high price of crude oil. In Asia, propylene prices increased because of a surge in purchasing buying activity in anticipation of lower inventory levels in August. In Europe, Propylene prices fell as a result of poorer propylene feedstock contract values for the month of August 2022 and bearish regional buying attitudes. The high availability of upstream Naphtha in the European domestic market abets the declining price trend of propylene in the domestic market.

According to ChemeAnalyst, This upward trend in propylene prices in the American and Asian markets is expected to continue for the foreseeable future due to the growing demand for propylene and the increasing availability of lighter volumes of raw materials from shale gas sources. Meanwhile, In Europe, the buying sentiments in the downstream industries are expected to be poor.

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