Mixed PP Production Profits with Diversified Feedstock Prices in May
Highlights: In May, gross profits from various feedstock-based PP production saw ups and downs. Therein, crude oil-based PP production profits brightened with a decline in cost but an increment in PP prices. Coal-based ones decreased as the growth in cost was larger than that in PP prices. Inversely, PDH-based PP production profits perked up as PP prices increased within a wider range than costs.
Crude Oil-Based PP Production Profit Grew
As of May 28, crude oil-based PP production profit was RMB -943.85/mt, which rose by RMB 585.88/mt M-O-M because of declines in crude oil-based PP production costs but increments in PP prices. The monthly average price of crude oil grew slightly to $83.03/bbl in May, which reflected that crude oil-based PP production costs dropped by 6.77%. Comparatively, crude oil-based PP market prices grew by 1.51%. On a year-on-year basis, crude oil-based PP production profits in May 2024 dropped by RMB 197.85/mt or 26.52%.
Coal-Based PP Production Profit Picked Up
As of May 28, coal-based PP production profits averaged RMB 17.71/mt, which dropped by 93.55% or RMB 257.04/mt M-O-M, as the increase in coal-based PP prices was softer than that in production costs. Steam coal prices moved up in May, indicating that coal-based PP production costs climbed by RMB 356.04/mt or 5.09% M-O-M, while the average price of coal-based PP rose marginally by RMB 99/mt or 1.36%. On a year-on-year basis, coal-based PP production profits in May 2024 grew by RMB 882.71/mt or 102.05%.
Outsourced Methanol-Based PP Production Profit Losses Severer
The average profit from producing methanol declined by RMB 194.83/mt or 34.89% M-O-M to RMB -753.33/mt. The average price of methanol was RMB 2,274.44/mt, up RMB 97.94/mt or 4.50% M-O-M, reflecting an increase of 3.75% in production costs, while methanol-based PP prices grew less by 1.36% M-O-M. Thus, the average profit from outsourced methanol-based PP production declined.
PDH-Based PP Production Profit Brightened
As of May 28, PDH-based PP production profits climbed by 9.82% or RMB 43.16/mt M-O-M, as PDH-based PP prices grew at a higher rate than that in production costs. PDH-based PP production costs increased by RMB 45.4/mt or 0.57% M-O-M, as propane prices gained ground, yet propane-based PP average price rose more by RMB 88.56/mt or 1.17% M-O-M, leading to improved profits. On a year-on-year basis, PDH-based PP production profits in May 2024 dropped by RMB 234.57/mt or 145.04%.
Outsourced Propylene-Based PP Production Profit Climbed
The outsourced propylene-based PP production profits rose in May and averaged RMB -71.46/mt, up RMB 160.07/mt or 69.14% M-O-M. China’s propylene market prices fluctuated within a certain range in May. In terms of cost, the international crude oil prices dropped notably, exerting bearish impacts on China’s propylene market. Though the prices of the feedstocks such as propane and methanol inched up, the influence upon the propylene market was limited. In terms of supply, some newly added capacity was released in Shandong, increasing the market supply pressure, even though some units saw unsteady operating rates. The producers’ inventory pressure was mainly rational, with only some under sales pressure. In terms of demand, the profits from producing downstream products like PP and acrylonitrile were favorable, supporting propylene demand. Generally, China’s propylene monthly average price dipped by 1.02% M-O-M to RMB 6,781.39/mt, so the outsourced propylene-based PP production cost dropped by RMB 71.51/mt or 0.92% M-O-M. Comparatively, outsourced propylene-based PP average price rose by 1.17% M-O-M. Generally, profits mounted up in May.
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