Oil-based route remains dominant in PP capacity expansion

China's PP granule production capacity has been steadily increasing year by year. According to statistics from CCFGroup, the newly added capacity in 2022 was 2.65 million tons/year. From 2023 until now, an additional 4.4 million tons/year has been added, reaching a new high compared to previous years. With still over two months left until 2024, it is expected that PP production capacity will continue to increase.

Plants put into production in the first three quarters:

Looking at the quarterly data, the new start-ups were mainly concentrated in the first and third quarters, with capacities of 1.85 million tons/year and 1.55 million tons/year, respectively. Breaking it down further into monthly data, plants were mainly put into production in February, July, and September, with capacities of 1.45 million tons/year, 0.65 million tons/year, and 0.9 million tons/year, respectively.

In terms of feedstock sources, in 2023, most new start-ups are oil-based and PDH-based. In the first three quarters, the proportion of newly oil-based plants accounted for nearly 60%, while PDH-based plants accounted for nearly 30%. Considering the plants planned to start-up in the fourth quarter, the proportion of PDH-based plants is expected to further increase.

Planned new start-ups for the fourth quarter:

According to statistics from CCFGroup, the planned new production capacity for the fourth quarter are 3.05 million tons/year. Among them, 400kt/year of Ningbo Kingfa Advanced materials I #1 has been put into production in early Oct, and line 2 is scheduled to start production in early October, and now has been postponed to early November.

Overall, the fourth quarter will see a significant increase in production capacity, further adding pressure to the supply. However, considering the profit of PP and the historical situations, there is a possibility of delayed startup. In fact, the likelihood of delayed startup is relatively high. Therefore, it is recommended that market players closely monitor the actual progress of production.