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Review of PP Market in 2021

2021-12-27 07:46:09 CCFGroup

Price trend

In 2021, the overall China domestic PP granule market shows an "M" trend, with two price peaks throughout the whole year, the first peak in early March and the second in mid-October, which is the highest since 2019.

In mid-to-late February, PP prices rose sharply. On the one hand, it was related to the rising futures, on the other hand, many foreign plants shut due to the extreme weather. The short-term mismatch of supply and demand caused imported PP market to rise sharply. China domestic export arbitrage window opened, and RMB spot prices rose accordingly.

In September, PP price surged, mainly due to the rapid transmission of the dual control policy in the market at the end of August, the price driving factor transferred from supply and demand to cost, and the cash flow of each production process was in full loss, especially in coal-based PP and methanol-based PP.

Capacity


Sources of propylene	Region	Company	Capacity （KTA）	Startup time
oil-based	Northeast China	Haiguolongyou #1	200	2021.2
oil-based	Northeast China	Haiguolongyou #2	350	2021.3
MDH	North China	Dongming Hengchang Chemical	200	2021.3
oil-based	North China	Sinopec Tianjin Lianhe II	200	2021.5
PDH	East China	Oriental Energy II #1	400	2021.5
PDH	East China	Oriental Energy II #2	400	2021.6
oil-based	Central China	Sinopec-SK (Wuhan) PC #3	300	2021.6
oil-based	South China	Fujian Gulei Petrochemical	350	2021.8
oil-based	Northeast China	PetroChina Liaoyang PC (capacity enlargement)	300	2021.8
PDH	North China	Qingdao Jineng Technology I	450	2021.9
Total			3150

From the perspective of new start-ups, it’s still a year of rapid expansion of production capacity in 2021. Although the new production capacity is not as good as the 3.8 million tons/year in 2020, the new capacity still exceeds 3 million tons/year, reaching 3.15 million tons/year and the total production capacity reaches 31.405 million tons/year. It is reported that the 450kt/year PP plant #1 of Zhejiang Petroleum & Chemical II has been trial-run in the near future, and it is expected to start commercial production at the end of December/early January.

In terms of distribution area, the production of the new PP plant is mainly concentrated in Northeast China (850kt/year), North China (850kt/year) and East China (800kt/year)., and there is no new production capacity in Northwest and Southwest regions.

Cash flow

Production process	PP granule					PP powder
Production process	oil-based	coal-based	MTO	PDH	imported propylene	Shandong propylene
2019	1859.26	1416.38	391.37	2017.74	387.47	207.59
2020	2526.19	626.81	565.41	1824.11	146.12	95.47
2021	1098.54	-1700.41	-894.49	702.35	-51.84	-72.24

Judging from the cash flow of each production process, the cash flow of PP has been significantly affected by the rising cost of raw materials in 2021. As of Dec 22, only oil-based PP made profits. From the annual average level, the cash flow of oil-based PP and propane dehydrogenation-based PP remained profitable, but it has shrunk significantly compared with that of 2020, while others have basically turned negative.

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