PP Supply to Slide amid Extensive MA & Delayed Capacity Release
Preface: China’s PP producers have run units at relatively low loads recently, and operating rates lingered at 78%-80%. It is expected that unit maintenance will probably be extensive in the short run, and the commissioning of fresh units has a risk of being postponed. Thus, the PP supply pressure may be alleviated, bolstering the PP market somewhat.
There may be more unit turnarounds from mid-to-late March, and the capacity involved may be 5,910kt/a. The output loss caused by maintenance may be around 597.8kt. The units that will undergo maintenance may be mainly crude oil-based and PDH-based PP units. It will be hard for the current profit level to push up the unit operating rate.
Mar-May 2024 China PP Unit MA Plans
Remarks: MA = maintenance, RS = restart, SD = shutdown
Methodology: The output loss above refers to the affected output due to maintenance at producers during the week with a sample coverage rate of 100%. It is calculated via multiplying daily output by maintenance days.
In terms of capacity expansion, the new unit at Anhui Tianda Petrochemical had a successful test run, but its official commissioning was postponed to April. Huizhou Lituo New Material planned to put two sets of 150kt/a units into operation, but only one unit has come on stream and produces and presells raffia materials. Besides, the PDH unit at Lihuayi Group Weiyuan Chemical was put into use at the end of 2023, which underwent maintenance recently, and therein, its PP unit startup time was uncertain. As seen from the below table, the startup time of most units in Q1, 2024 was delayed to April and May, and fresh projects will probably affect the PP market in May.
Jan-May 2024 China Newly Added PP Capacity
Generally, China’s PP supply change was mainly influenced by the struggle between unit maintenance and capacity release. It is predicted that capacity expansion will be relatively intensive from March to May, and there may be more maintenance plans than those in early 2024. The commissioning of new units has been delayed mostly. SCI reckons that the PP supply pressure will probably be alleviated in the short run, as operating rates of PP units are likely to slide in March. Later, the supply pressure may rise slowly from April to May with capacity release.
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