Most PP Grades Saw Supply Gain amid Capacity Expansion
Highlights: China’s PP output advanced noticeably in March on the back of more natural days in the month and the operation of newly built units, which reflected higher supply pressure in the PP market. As for specific grades, most of the PP grades witnessed a supply increase, but the PP demand from major downstream fields was weaker compared with the same period of last year.
China’s PP output began to involve output at PetroChina Guangdong Petrochemical 1# line and Sinopec Hainan Refining & Chemical double lines in March. The output reached 2,721.5kt in March, up 16.42% M-O-M and 10.55% Y-O-Y. The daily output of PP was around 87kt during the month, up 5.15% from February.
PP output in various regions mounted up in March. Therein, the output growth rate was especially high in Central China and South China, reaching 24.90% and 23.87% respectively. Sinopec Jingmen Company, Sinopec Luoyang Company old line, Sinopec Luoyang Company and Sinopec Zhongyuan Petrochemical old line resumed production, underpinning the steady output growth in Central China. In South China, there were three sets of new units with total capacity of 1,000kt/a, and they had run normally. Besides, Sinochem Quanzhou Petrochemical and Sinopec Maoming Petrochemical also restarted production from shutdown. Last, there were more natural days in March compared with February, which also prompted PP output to grow.
In terms of feedstock, China’s PP output via most feedstock sources ramped up. Therein, outsourced propylene-based PP output rose the most by 48.48% M-O-M in March, with Xuzhou Haitian Petrochemical and Lihe Zhixin New Material Technology resuming normal production. In addition, three newly added units all produced PP with crude oil as feedstock, so their stable operation promoted crude oil-based PP output to increase by 18% M-O-M.
East China PP Price Comparison by Category
The downstream demand improvement was softer than expected, but PP capacity continued to increase, so PP prices went down amid soft supply-demand fundamentals. At the end of March, PP prices rebounded slightly on the back of stronger feedstock prices. Specifically, homo PP injection output declined by 11.61% M-O-M, so its supply pressure was unobvious. The price spread between raffia and homo injection remained largely stable. The supply of high-MFR fiber grew by 22.01% M-O-M to a relatively high level in March, but the downstream demand was insipid, dragging down high-MFR fiber prices. Thus, the price spread between raffia and high-MFR fiber shrank to RMB 80-100/mt. As for low-MFR copolymer, its output basically stayed flat in March, while its import volume was limited with firm USD prices. Besides, its downstream demand revived a little. The price spread between raffia and low-MFR copolymer was immobile.
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