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Insight | Time: Aug 23 2022 10:55AM  Editor:Amber
Why PP market still depressed amid intensive shutdown?
 
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As of late August, PP market still does not have a relatively clear expectation for improvement. Although PP market has been supported by the plant maintenance, it is still sluggish, and market mindset is confused.

 

First, support from the supply side.


China PP plants shut for maintenance in Aug
Company Capacity 锛圞TA锛 Operating rate loss Time Shutdown days in Aug Daily output锛坘t锛 Production loss(kt)
Changzhou Fund 50 100% long-term 31 0.2 4.7
PetroChina Dalian PC 50 100% long-term 31 0.2 4.7
Changzhou Fund 300 100% 2017.7.1-/ 31 0.9 27.9
Sinopec Wuhan PC 105 100% 2021.11.12-/ 31 0.3 9.8
Haiguolongyou #1 200 100% 2022.2.1-/ 31 0.6 18.6
Hebei Haiwei 300 100% 2022.3.1-2022.8.15 15 0.9 13.5
Haiguolongyou #2 350 100% 2022.4.3-/ 31 1.1 32.6
Sinopec Maoming PC #1 170 100% 2022.4.28-/ 31 0.5 15.8
PetroChina Fushun PC 90 100% 2022.5.1-/ 31 0.3 8.4
West Pacific Petrochemical (WEPEC) 150 100% 2022.6.1-/ 31 0.5 14
Sinopec Maoming PC #2 300 100% 2022.6.9-2022.8.11 11 0.9 9.9
Sinopec Maoming PC #3 200 100% 2022.6.9-2022.8.8 8 0.6 4.8
Sinopec Shanghai PC #1 100 100% 2022.6.18-2022.8.6 6 0.3 1.8
Sinopec Shanghai PC #2 100 100% 2022.6.18-2022.8.6 6 0.3 1.8
Sinopec Shanghai PC #3 100 100% 2022.6.18-2022.8.22 22 0.3 6.6
Tianjin bohai chemical I 300 80% 2022.7.7-/ 31 0.7 22.3
Zhejiang Petroleum & Chemical  II #2 450 100% 2022.7.7-2022.8.11 11 1.4 14.9
PetroChina NorthChina PC 100 100% 2022.7.11-2022.8.31 31 0.3 9.3
PetroChina Hohhot PC 150 100% 2022.7.11-2022.9.4 31 0.5 14
Shaanxi Yanchang #1 300 80% 2022.7.15-2022.9.2 31 0.7 22.3
Shaanxi Yanchang #2 300 80% 2022.7.18-2022.8.16 16 0.7 11.5
Grand Resource (Juzhenyuan) I #2 300 100% 2022.7.21-2022.8.6 6 0.9 5.4
Sinopec Qilu Petrochemical 70 100% 2022.7.22-2022.8.5 5 0.2 1.1
Grand Resource (Juzhenyuan) I #1 300 100% 2022.7.25-2022.8.1 1 0.9 0.9
Zhejiang Petroleum & Chemical  II #1 450 100% 2022.7.27-/ 31 1.4 41.9
Qinghai Yanhu 160 50% 2022.7.28-2022.8.31 31 0.2 7.4
Liaoning Huajin Tongda 60 100% 2022.7.30-2022.8.9 9 0.2 1.6
Datang Duolun #1 230 100% 2022.7.31-2022.8.6 6 0.7 4.1
Qinghai Yanhu 350 100% 2022.7.31-2022.9.9 31 1.1 32.6
Sinopec Tianjin Lianhe 60 100% 2022.8.1-/ 31 0.2 5.6
Liaoning Bora Enterprise Group #2 200 100% 2022.8.1-2022.8.3 3 0.6 1.8
Zhongtian Hechuang #1 350 100% 2022.8.1-2022.8.6 6 1.1 6.3
Hengli Petrochemical II #2 200 100% 2022.8.1-2022.8.24 24 0.6 14.4
Oriental Energy II #1 400 100% 2022.8.2-2022.8.31 30 1.2 36
PetroChina Lanzhou PC 50 100% 2022.8.2-2022.8.31 31 0.2 4.7
Grand Resource (Juzhenyuan) I #1 300 100% 2022.8.3-2022.8.8 6 0.9 5.4
Hengli Petrochemical II #1 200 100% 2022.8.3-2022.8.24 22 0.6 13.2
Oriental Energy II #2 400 100% 2022.8.6-2022.8.9 4 1.2 4.8
Qingdao Jineng Technology I 450 90% 2022.8.9-2022.8.11 3 1.2 3.6
Sinopec Yanshan PC #2 50 100% 2022.8.10-/ 22 0.2 3.3
Sinopec Yangzi PC (YPC) #B 100 100% 2022.8.10-2022.8.17 8 0.3 2.4
Ningbo Fortune 400 100% 2022.8.10-/ 22 1.2 26.4
CSPC II 400 90% 2022.8.12-2022.8.17 6 1.1 6.5
Liaoning Bora Enterprise Group #1 400 100% 2022.8.12-2022.8.17 6 1.2 7.2
Dongming Hengchang Chemical 200 100% 2022.8.15-2022.8.21 7 0.6 4.2
Shenhua Xinjiang 450 100% 2022.8.15-2022.9.29 17 1.4 23
PetroChina Liaoyang PC 300 80% 2022.8.16-2022.8.20 6 0.7 4.3
Shaanxi Yanchang ChinaCoal II 300 80% 2022.8.16-/ 16 0.7 11.5
Total 548.8


According to the statistics of CCFGroup, as of Aug 22, the production loss of China domestic plants due to plant maintenance has reached 548,800 tons, far exceeding the previous level (469,900 tons in July).  Judging from the data alone, the maintenance intensity is not small, which involves several plants which mainly produce homo PP raffia, such as Shenhua Xinjiang, Dongming Hengchang, Liaoning Bora Enterprise Group and so on. Also, as some other plants change their production lines, the production ratio of homo PP raffia is maintained at 25% or below for most of the time.

 

Second, insufficient demand from end-users.


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However, even supported by the plant maintenance, the market is still sluggish. It is believed that the main important factor is the lack of downstream demand. First of all, the repeated outbreak of the epidemic has seriously restricted downstream demand and logistics and transportation. Second, there have been continuous high temperature weather in many places this year, and there is a large gap in power supply. Power rationing policies have been implemented in many places, requiring industrial enterprises to stagger production during peak load times, mainly in Sichuan and Chongqing and Jiangsu and Zhejiang. Taking the BOPP industry as an example, BOPP can be said to be relatively healthy in the downstream of PP, but there has also been a decline in operating rate and orders recently, which shows that the current downstream demand is not enough to support the upward trend of the market.



Third, whether the peak season can be expected.

 

The golden September and silver October is coming soon, and many market participators are wondering whether the peak season can come. The traditional off-season is coming to an end. Also, with the relief of high temperature in the future, the power rationing policy is expected to be cancelled, downstream demand is expected to increase. However, upstream plants shut will restart gradually, and supply is also expected to increase. In addition, new plants such as CNOOC Ningbo Daxie petrochemical will be put into production soon, and the pressure on the supply side is still increasing. On the other hand, under the influence of the epidemic, it is uncertain whether downstream demand can recover. Therefore, it is expected that the demand in golden September and silver October in 2022 may still be not prosperous.




[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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