Analysis of China domestic PE market supply
Since the second quarter, PE market has maintained in weak consolidation. Although the market moves up occasionally, the overall impact on the market is limited due to the small increase and short duration. From the perspective of market supply and demand, the short-term market is still weak due to the poor supply and demand. Under the recognized off-season demand, can the supply side give a certain direction in the future market?
China domestic production
Since a total of 2.2 million tons plants of PetroChina Guangdong PC, Sinopec Hainan and Shandong Jinhai Chemical from March to April, there are no new plants in the medium term (May-Aug). The 400kt/year HDPE plant of Ningxia Baofeng III may be put into production at the end of second quarter and the beginning of fourth quarter. Excluding the impact of the new device, then the biggest problem lies in the maintenance plants.
According to the following figure, the total production capacity of the maintenance plants is 4.20 million tons.
Enterprises | Production | Capacity (kt/year) | Note |
Shenyang Chemical | LLDPE | 100 | shut on Oct 15, 2021 |
ZRCC | HDPE | 300 | shut on Mar 5, 2022 |
Haiguolongyou | HDPE/LLDPE | 400 | shut on Apr 6, 2022 |
Wanhua Chemical | HDPE | 350 | shut on Nov 12, 2022 |
Wanhua Chemical | HDPE/LLDPE | 450 | shut on Apr 29, and may restart on end May |
PetroChina Fushun PC | old HDPE | 140 | shut on Apr 6 |
Shenhua Ningxia Coal II | HDPE/LLDPE | 450 | shut on Apr 19 for around a month |
PetroChina Daqing PC | HDPE #2 | 80 | shut on Apr 27, and may restart on end May |
Ningxia Baofeng Energy | HDPE/LLDPE | 300 | shut on May 4 |
Zhejiang Petroleum & Chemical II | LLDPE/HDPE | 450 | shut on May 10 for around 15days |
Zhejiang Petroleum & Chemical II | HDPE | 350 | shut on May 15, and may restart on end May |
Sinopec Maoming PC | LDPE | 250 | shut on May 14 for short maintenance |
Sinochem Quanzhou | HDPE | 400 | shut on May 15 |
PetroChina Dushanzi PC | old HDPE/LLDPE | 100 | shut on May 15 |
4120 |
At present, plants shut for mainteance intensively. Since May, China domestic PE plant operating rate has gradually declined. On May 15, China domestic PE plant operating rate is assessed at 81.77%. In the later period. If Secco, Pucheng Clean Energy, PetroChina Lanzhou PC and, PetroChina Daqing PC continue to shut for maintenance, the overall operating rate may continue to decline.
Imports:
In the first quarter of 2023, China imported 3.2552 million tons of PE, a decrease of 8.82% y-o-y, China imported 1.0285 million tons in January, 1.1195 million tons in February and 1.1072 million tons in March.
According to the data of the past two years, the fluctuation range of China's monthly PE imports is getting smaller and smaller, basically controlled in the range of 1-1.2 million tons. With the launch of several China domestic refinery and chemical integrated complex, the dependence on imports has obviously weakened, and imported products are also more transferred to high-tech materials and special materials, and the import volume tends to be more stable. In addition, the current CFR China market continues to remain weak, and the price spread between RMB market and CFR China market has narrowed. The market fluctuates within small range, which leads to the overall import volume also tends to be stable.
Generally speaking, with the stable output of China domestic new plants, the change mainly comes from the reduction of plant maintenance in the second quarter. However, in terms of the current supply and demand pattern, the overall supply still increases due to the early new startups. Moreover, demand is weak amid the slack season, and the overall market may remain poor.
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