Will intensive new capacity alter PP supply-demand structure?

In early November, the 300kt/year PP unit of Jincheng Petrochemical was put into operation. However, it is currently producing PP powder. In mid-November, Sinopec/Ineos Tianjin starts up 350kt/year PP plant, and is now running for PPH-T03.

After that, the 500kt/year PP plant #1 of Inner Mongolia Baofeng Coal-based New Materials successfully produced trial production material HP550J in the middle of the month. It is estimated that formal production is not far away. In the future, there are still plans to put into operation of the PP plant #2 and 33 (it is reported that they will be implemented in 2025). The designed production capacity of each is 500kt/year.

In addition, Shandong Yulong Petrochemical (with a designed production capacity of 1.9 million tons per year, 400*4+300) has also been tested run. The possibility of all five units being put into operation simultaneously is not high.

With the startup of a large number of new plants, the production capacity of PP has once again expanded after a lapse of four months since the second quarter. With the increase in supply, the current market supply-demand balance may be broken. Especially in North China, in addition to local Jincheng Petrochemical, Sinopec/Ineos Tianjin, and Shandong Yulong Petrochemical, the spot goods of Inner Mongolia Baofeng Coal-based New Materials will also be sold to the three major mainstream consumption areas, which can be said to be under great pressure.

On the demand side, the traditional downstream demand is lukewarm, the willingness to chase up is not strong, and it is mainly based on rigid demand at low prices.

Since November, PP market price fluctuates narrowly, with a fluctuation range of less than 50yuan/mt. The market situation can be said to be quite deadlocked. The change in the supply-demand pattern caused by the launch of new plants may expand the fluctuation range of PP prices. Due to the weakening of the supply-demand pattern, the spot prices will mainly move downward.