Homo PP raffia and low-MFR co PP price spread expected to widen
Recently, the production proportion of homo PP raffia and low-MFR co PP has been reduced to a historical low, especially low-MFR co PP. However, with the growth of the production capacity, there are still some differences between the changes of production proportion and the actual change of supply. For example, the actual daily output of homo PP raffia is still at a middle level in the past three years, while low-MFR co PP is indeed at a historically low level.
The changes in the supply side also partly explains why the price spread between Homo PP raffia and low-MFR co PP has widened recently. The change of the price spread depends on the change in the supply side on the one hand and the acceptance of the downstream on the other hand. With the growth of the production capacity, spot market has gradually changed from a seller's market to a buyer's market. In addition, downstream demand has been restricted due to the frequent outbreak of epidemics recently.
Company | Location | Capacity (KTA) | Shutdown Time | Restart Time |
Changzhou Fund | Changzhou | 300 | 2017.7.1 | / |
Sinopec Wuhan PC | Wuhan | 105 | 2021.11.12 | / |
Haiguolongyou #1 | Daqing | 200 | 2022.2.1 | / |
Hebei Haiwei | Hengshui | 300 | 2022.3.1 | / |
Sinopec Yangzi PC (YPC) #B | Nanjing | 100 | 2022.3.14 | 2022.5.28 |
Qingdao Jineng Technology I | Qingdao | 450 | 2022.3.15 | 2022.5.10 |
Sinopec Yangzi PC (YPC) #2 | Nanjing | 200 | 2022.3.15 | 2022.5.9 |
FREP | Quanzhou | 120 | 2022.3.15 | / |
Sinopec Hainan Refinery | Danzhou | 200 | 2022.3.16 | 2022.5.12 |
CSPC II | Huizhou | 400 | 2022.3.24 | 2022.4.30 |
Sinopec Yangzi PC (YPC) #A | Nanjing | 100 | 2022.3.25 | 2022.4.30 |
Dongming Hengchang Chemical | Heze | 200 | 2022.3.28 | 2022.4.30 |
Sinopec-SK (Wuhan) PC | Wuhan | 200 | 2022.4.1 | 2022.5.1 |
Haiguolongyou #2 | Daqing | 350 | 2022.4.3 | / |
Hebei Lihe Zhixin I | Cangzhou | 300 | 2022.4.3 | / |
PetroChina Dagang PC | Tianjin | 100 | 2022.4.8 | 2022.4.22 |
Xuzhou Haitian | Xuzhou | 200 | 2022.4.9 | / |
Zhongtian Hechuang #2 | Erdos | 350 | 2022.4.12 | 2022.4.21 |
Qinghai Yanhu | Yanhu | 160 | 2022.4.16 | 2022.4.24 |
PetroChina Daqing Refining & Chemical | Daqing | 300 | 2022.4.18 | 2022.6.5 |
PetroChina Dushanzi PC | Karamay | 70 | 2022.4.19 | 2022.4.27 |
As for the reduction of supply, on the one hand, it is due to the intensive turnaround of PP plants, which currently involves a production capacity of nearly 4.8 million tons per year, and the operating rate of the industry is close to 80%. On the other hand, there are not many plants produce low-MFR co PP. At present, there are only a few plants producing low-MFR co PP, such as Sinopec Tianjin Lianhe II, Shaanxi Yanchang ChinaCoal II, and Datang Duolun and so on; while Ningbo Fortune, Zhejiang Petroleum & Chemical, Hengli Petrochemical, PetroChina Dushanzi PC, Yan'an Energy & Chemical and Ningxia Baofeng Energy which used to be stable sources of low-MFR co PP in the past, have not arranged to produce low-MFR co PP recently. Some enterprises even cut off production for more than a month.
To put it simply, if the production of low-MFR co PP cannot be effectively increased, the shortage of supply of low-MFR co PP in the market will be gradually reflected. Although the current pandemic situation is not clear and the downstream demand is uncertain, the rigid market demand still exists, and the price spread between homo PP raffia and low-MFR co PP still expects to widen.
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