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Insight | Time: Jan 6 2022 6:20PM
PP market under supply pressure
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On Jan 1, Indonesia announced a ban on coal exports from Jan 1 to Jan 31. Under the influence of the ban and the epidemic in Beilun, Ningbo, PP May futures contract opened high and then fluctuated on the first working day after the holiday, driving spot prices higher. Then, the market gradually returned to normal range, and PP spot prices also fell slightly.


On the whole, the ban on the export of Indonesian coal has more impact on market sentiment, while the Beilun epidemic in Ningbo has a more direct impact on the supply of PP. The PP plant in Beilun District involves a production capacity of 1.65 million tons/year, accounting for 5.24% of the national production capacity. At present, the PP plants of Ningbo Fortune and Oriental Energy II are operating normally, but a pass permit is required for delivery. FCFC Ningbo said that if there is any problem on the logistic transportation in the later stage, its PP plant may shutdown. In addition to the above-mentioned plants, Shaoxing Sanyuan has also been affected to a certain extent, as the propane needed for production comes from Beilun Port, so the 200kt/year the PP plant is possible to shut.


Then, after talking about the temporary situation, let's talk about the maintenance arrangements in the plan.


1. Plant maintenance.

China PP plants shut for maintenance in Jan
Company Capacity 锛圞TA锛 Time Production loss(kt)
PetroChina Liaoyang PC 50 long term 4.7
PetroChina Dalian PC(old plant) 50 long term 4.7
Changzhou Fund 300 2017.7.1-/ 27.9
Haiguolongyou #1 200 2021.9.22-2022.1.5 3
Datang Duolun #1 230 2021.9.6-2022.1.5 3.5
Datang Duolun #2 230 2021.9.6-/ 17.1
Sinopec Wuhan PC 105 2021.11.12-/ 9.8
Sinochem Quanzhou 200 2021.11.29-2022.1.19 12.6
Ningbo Fund 400 2021.12.5-2022.1.18 21.6
Sinochem Quanzhou  II 350 2021.12.6-2022.1.19 20
Sinopec Zhongyuan PC(old plant) 60 2021.12.13-/ 5.6
Yutianhua 150 2021.12.18-/ 14
Sinopec Tianjin Lianhe  II 200 2021.12.25-2022.1.4 2.4
Hebei Haiwei 300 2021.12.30-/ 27.9
Grand Resource (Juzhenyuan) I #2 300 2021.12.30-2022.1.23 20.7
Grand Resource (Juzhenyuan) I #1 300 2021.12.30-2022.1.24 21.6
Total 217.1

Judging from the current situation, there are not many plants plan to shut for maintenance, but temporary shutdown is not ruled out. On the whole, the amount of maintenance losses in January is currently less than that in December, and several large plants, such as Sinochem Quanzhou, Sinochem Quanzhou II, and Grand Resource (Juzhenyuan) I, all have plans to restart in the second half of Jan, which also means that the overall operating rate of PP before the Spring Festival is expected to reach more than 90%.


2. Expansion schedules

Company Sources of propylene Capacity 锛圞TA锛 Startup time Note
Xuzhou Haitian II outsourced propylene 100 the first quarter of 2022 Jan
Zhejiang Petroleum & Chemical  II #1 oil 450 Jan
Gansu Huating coal 200 Jan
Shandong shouguang LuQing  oil 300 Mar
Zhejiang Petroleum & Chemical  II #2 oil 450
Jingang petrochemical I Methanol 350
Sinopec Zhenhai (ZRCC) II  oil 300
Tianjin bohai chemical I Methanol 300
Grand Resource (Juzhenyuan) II  propane 600
Total 3050

According to statistics from CCFGroup, in the first quarter of 2022, the new production capacity of PP is planned to exceed 3 million tons/year. If all of them are put into production, the growth rate will be very obvious. Of course, the possibility for all these plant to start up is very slim. In January, Xuzhou Haitian (Daqing Haiding), PP plant #1 of Zhejiang Petrochemical II, and Gansu Huating are still very likely to be put into production, and the news of trial run has been reported previously.


To sum up, in January or even in the first quarter, the supply pressure on PP market is relatively large. Currently, under the poor downstream demand, PP prices are likely to fall.

[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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