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2022 China polypropylene market review

2023-01-28 08:33:08 CCFGroup

1.Price trend

In 2022, China domestic PP granule market rose up first and then declined, with price peaked in early March.

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In the first half of the year, the core of the market mainly lay in the sharp rise and fall of crude oil under the influence of geographical politics (the conflict between Russia and Ukraine at the end of February and the beginning of March) and the disturbance of the epidemic, while in the second half of the year, it is more reflected in the game of supply and demand within the industrial chain under the epidemic.

At the end of February, the conflict between Russia and Ukraine escalated, and the commodity futures and stock market went up significantly. PP also reached the highest level of the year, of which the homo PP raffia price reached 9,550-9,600yuan/mt. Then, the market sentiment returned to rationality, and spot prices also gradually retreated.

From April to May, PP market was range bound, and the overall fluctuation was limited; from June to August, downstream entered the traditional demand off-season, and spot prices continued to decline. In late August, with the expected arrival of the traditional peak demand season, the market gradually warmed up and the market price began to move up. In Oct, PP futures was not as good as expected, and the peak season ended ahead of schedule. Then, the market fluctuated in November-December.

2.Capacity

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Source	Region	Company	Capacity (kt)	Startup time
outsourced propylene	Northeast China	Xuzhou Haitian II(Daqing Haiding)	100	2022.1
oil-based	East China	Zhejiang Petroleum & Chemical II #1	450	2022.1
oil-based	East China	Zhejiang Petroleum & Chemical II #2	450	2022.3
oil-based	East China	Sinopec Zhenhai (ZRCC)	300	2022.3
oil-based	North China	Shandong shouguang LuQing petrochemical #1	150	2022.6
MTO	North China	Tianjin bohai chemical I	300	2022.6
oil-based	East China	CNOOC Ningbo Daxie petrochemical	300	2022.9
PDH	South China	Zhongjing PC II	600	2022.9
Total			2650

By the end of December 2022, China PP granule production capacity increased by 2.65 million tons/year to 34.135 million tons/year, an increase of about 8.42%.

3. Cash flow

PP downstream demand continued to be weak, spot prices were hard to rise and high costs and negative profits gradually became the normal. Seeing from the above chart, in theory, the loss of coal-based PP was obvious, followed by MTO PP, and others such as oil-based PP and propane dehydrogenation-based PP were near the break-even line.

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Till the end of 2022, the average cash flow loss of oil-based PP in 2022 was about 906yuan/mt, about 1,359yuan/mt for outsourced MTO PP, about 2,848yuan/mt for coal-based PP, 580yuan/mt for propane dehydrogenation-based PP, about 289yuan/mt for imported propylene-based PP, and about 198yuan/mt for outsourced propylene-based PP powder.

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