PetroChina plans to cut PE production

Last week, CCFGroup has sorted out the adjustment plan made by Sinopec system in response to high oil prices, and the plan shows that some plant have cut operating rates or closed.( PE producers cut production amid high oil price) At present, 50% of the plants have been implemented the plan (some of the specific implementation has been slightly adjusted with the plan), and the rest plans are initially expected to be implemented in the near future.

On Mar 15, PetroChina could not resist the cost pressure and plans to cut operating rates or shut the plants. According to the production reduction plan, the actual production of polyolefin may be reduced by 77,000 tons, which involved a reduction in PE production of around 52,000 tons. Details are as follows:

According to CCFGroup, PetroChina has a total production capacity of 2.715 million tons of the total PE production capacity in China, accounting for 9.95%. Relatively speaking, the impact of its production reduction is much smaller than that of Sinopec. Furthermore, the plants of PetroChina is mainly concentrated in the Northeast China and North China, which are more significantly affected by coal chemical industry. What's more, the production of PE has been reduced by 52,000 tons, accounting for only about 2% of the total PE output. Therefore, on the whole, the impact of PetroChina's production reduction on the entire PE market will not be obvious.

In addition, crude oil has recently fallen from a high level, overnight WTI and Brent futures fluctuates to close at $96.44/barrel and $99.91/barrel respectively, and the cost pressure of WTI and Brent may be slightly reduced. Moreover, the petrochemical plant has a certain maintenance plan in the spring turnaround season, and the overall effect of the current operating rate cuts and plant shutdown is limited for the overall market.