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Insight | Time: Aug 30 2019 5:24PM
Reasons back CPL price trend
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1. CPL plant turnarounds
Frequent plant turnarounds or accidental shutdown in August 2019 had caused unstable supply of CPL, and prices were mainly waving around this topic. Below table shows CPL plant turnarounds in August 2019.

Company Product Capacity (kt/year) Operation status
Risun CPL 50 Expanded capacity by 50kt/year since Aug 1
Baling Hengyi CPL 100 Started up new production line in early Aug, but ran unstably
Eversun CPL 200 Shut for one week since Aug 7
Yangmei CPL 200 Shut for turnaround during Aug 10-28
Haili Shandong CPL 200 Shut accidentally due to typhoon on Aug 12, restarted on Aug 20 but ran at low rate, recovered till Aug 26
Luxi Chemical CPL 100 Shut for technical glitch on Aug 15, the other 200kt/year line lowered run rate
Risun CPL 150 Lowered run rate due to typhoon to 60-70% for 10 days since Aug 15
Juhua CPL 100 Shut for 3-4 days turnaround on Aug 16
Shijiazhuang Refinery CPL 100 Lowered run rate to 90-95% due to feedstock supply since Aug 28

The average run rate of CPL plants had once dropped below 70% for around 5 weeks, causing market supply tight in the market for a certain period of time. And prices in North China appeared firmer as local producers had more frequent operational changes.

2. Firming benzene price

In addition to the tight supply, recent firming benzene price trend has been a supporting factor as well. Benzene spot prices had touched a lowest rate in early Aug around 4,950yuan/mt and then rebounded to 5,430yuan/mt all the way long till end of the month. At mean time, Sinopec raised the contract nomination for benzene continuously, being a strong back force for CPL.

The price wave in benzene is rooted in reducing supply in China, given that South Korea cargoes have been exported to North America instead of China. The port inventory had reduced to 145kt, and based on this condition, domestic benzene prices soared up.

3. CPL profit

In the above chart, CPL profit margin based on spot benzene cost has been condensed to around 200-300yuan/mt, close to the rate in mid-Jun 2019, when CPL price was as low as 11,300-11,500yuan/mt. It is very hard for CPL plants to yield in prices further.

Based on all the factors stated, CPL price is considered around a bottom place, and it is difficult for CPL to fall further, unless benzene prices decline. But looking into September, benzene market is relatively strong and CPL plant are slowly restoring supply, but their inventory may not by accumulated as fast as downstream expects.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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