Twice The Charm
Two new rail terminals are opening in the Northeast. These strategic terminals will help us deliver reliable propane supply to you, and they'll make transportation more effective.
New Locations:
- Hampton, NY
- Grafton, MA
We have our own rail supply at each new supply point and we’re starting to load transports. We’ll have index and fixed-price contracts available shortly at all of our supply locations for the 2018-2019 contract season. Either Glenn Young or I will be in touch with you soon to review your upcoming needs.
Conway Versus Belvieu Debate
Last summer/early fall the Conway/Belvieu spread was between .03 and .05 cents per gallon. That’s fairly typical, as it reflects the pipeline tariff from the Midcontinent to the Gulf Coast. After all, if the spread were less than the pipeline tariff, why would anyone ship anything south? Which is precisely what happens when Conway inventories need to build. When the price in Conway moves higher than Belvieu, it allows Midwest inventories to build.
The current Conway/Belvieu spread is much wider than the historical average, and the current .17 cpg spread, in my opinion, is not sustainable. A month or two from now, the two markets may only be .05 cents per gallon apart.
I know that there have been more ship cancellations in March than new ship orders, but that can change quickly. Belvieu propane has been at 51% of the value of $62.00 bbl. crude recently and that is probably too low.
I wouldn’t be surprised if Belvieu and Conway prices start to move a little higher again. And, maybe Conway moves disproportionately higher, relative to Belvieu, closing the gap.
A customer from New Hampshire recently asked me, “Is Conway pricing always lower than Belvieu?”
Not at all. In fact, sometimes it’s higher. Bear in mind that the freight from the Midcontinent-priced markets to the Northeast is much higher than from regional, Belvieu-based, distribution points. Thus, there isn’t always much net difference in terms of pricing for us in the Northeast.
What’s happening with propane prices?
EIA weekly numbers:
US propane inventories for the week ending 3/9/18 had a draw of 2.3 mmbbls. (38.8 mmbbls. total) and stand 12.7% behind last year.
Conway, KS, inventories built 0.1 mmbbls. (10.0 mmbbls. total) and are still 18% behind last year.
Mt. Belvieu, TX, inventories drew down 2.5 mmbbls. (24.0 mmbbls. total) and are 11% behind last year.
You Cannoli Live Once
Many readers of this blog have seen Glenn roll into town with chocolates or handmade donuts and cookies from Bella Napoli, a wonderful Italian bakery in Troy, NY. I can’t tell you how often a customer calls and says “Everyone loves seeing Glenn. The cookies and donuts are so good that there’s nothing left if I don’t get to the counter quickly!”
As a wonderful woman at Bella Napoli once said, “You cannoli live once. So smile, enjoy life!"
Let us take your propane supply worries away, so can spend more time enjoying life. If you haven’t bought propane from us yet, please do. You'll be glad you did. And if you already buy propane from us, thank you! We’d be grateful if you’ll allow us the opportunity to help you with more of your propane requirements this year.
The Skinny:
We're very excited that two new rail terminals are opening in the Northeast. These strategic supply points will allow us to serve you even better.
We’re also looking forward to seeing you at the PGANE meeting (Providence, RI), or the NYPGA meeting (Albany, NY), or the Southeast Propane Convention (Atlanta, GA). We'll bring the chocolates ...
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NOTE: The views and opinions expressed herein are solely those of the author, unless attributed to a third-party source, and do not necessarily reflect the views of Ray Energy Corp, its affiliates, or its employees. The information set forth herein has been obtained or derived from sources believed by the author to be reliable. However, the author does not make any representation or warranty, express or implied, as to the information’s accuracy or completeness, nor does the author recommend that the attached information serve as the basis of any buying decision and it has been provided to you solely for informational purposes.
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