2021 Propylene Industry Profit Narrowed
In 2021, the production cost of propylene increased greatly, causing the profit of propylene industry to be compressed, and even the production of coal-based propylene and PDH-based propylene experienced the profit losses. The propylene production profits were transferred to downstream products, and the profits of downstream chemical products industries mounted up obviously. The profit of PP industry underperformed because the price correlation between propylene and PP was higher.
Great increase in production cost dragged down the production profit of propylene.
In the past five years, the overall profit from propylene production was relatively good. Therein, the production cost of methanol-based propylene was obviously high, and the gross profit was negative most of the time except for the obvious improvement in 2020. The production costs of oil-based, coal-based and PDH-based propylene were not significantly different, and the overall gross profit performed well. However, in 2021, prices of propylene feedstock rose notably, enhancing the production costs of different processes. Therefore, the profit of propylene industry pared down, and the annual comprehensive profit slipped to below RMB 1,000/mt.
From January to August 2021, the production cost of propylene was relatively stable. Hereinto, the production costs of coal-based, methanol-based and PDH-based propylene changed limitedly, while that of coal-based propylene inched up. From September to December, the production cost of propylene rose first and then fell, with a wide fluctuation. Especially in October, the production costs of coal-based, methanol-based and PDH-based propylene all rose sharply, of which the costs of coal-based and methanol-based propylene exceeded RMB 10,000/mt.
In 2021, the production profits of propylene by different processes showed a downtrend. The profit from propylene production by coal-based, methanol-based and PDH-based processes all experienced significant losses, and that by oil-based process was also close to the profit and loss line in November. Hereinto, the largest profit loss of coal-based propylene in October exceeded RMB 4,600/mt. Moreover, the production profit of PDH-based propylene remained negative from H2 October to December, so some PDH units were shut down for maintenance.
Propylene profits are transferred to downstream products, and downstream chemical products market perform well.
Different from propylene, in 2021, the downstream derivatives market of propylene, especially the downstream chemical products market, performed well, and the profits increased greatly. Prices of some downstream chemical products such as oxo-alcohols and acrylic acid once notched a new high in ten years. The healthy market and high profits attracted more market attention, and more players entered related industries. From the perspective of comprehensive profit, the profit level of downstream industries was relatively low at the beginning and end of the 2021, but that was high from July and September and reached a peak in August.
From the perspective of changes in profit distribution in the propylene industrial chain, the profit of the propylene industry was significantly compressed in 2021, and the profit was lower than that of downstream chemical products. This indicated that propylene production profits were gradually transferred to downstream products. Among the downstream chemical downstream products, except for the relatively weak production profit of acetone, the production profits of other products were generally favorable. The profit from producing PO, 2-EH and acrylic acid exceeded RMB 10,000/mt in some periods. From Q1 to Q3, the production profit of PO, NBA and 2-EH was larger, while that of acrylic acid, acrylonitrile and ECH was relatively limited. However, this situation in Q4 became opposite.
In 2021, the profit of the PP industry underperformed, and the prices were near the cost most of the time. Hereinto, the monthly production profit of PP powder in April, May, June, August, October and December were negative. However, the price correlation between propylene and PP was still high, and the PP price had obvious influence on propylene price.
In 2022, the profit of the propylene industrial chain will be healthy, but the overall profit rate may decline.
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