Extensive Capacity Release Pushed Up PP Supply Pressure in 2023
Preface: China’s PP capacity rose year by year from 2019 to 2023 with continuous new capacity release. China’s PP market has ushered in a new round of expansion peak in 2019 with the entry of private large-scale refining and chemical enterprises and the continuous promotion of light ends projects.
Newly added capacity was still intensive in 2023. As of October 2023, China’s PP capacity reached 38,490kt/a, and the capacity growth rate was 13.41% in 2023, up 5.01 percentage points from 2022.
The continuous expansion of domestic capacity is expected to bring more opportunities and challenges to China’s PP industry in the future. As of end-October 2023, around 14 sets of PP units were put into operation and can produce qualified products. The fresh capacity was 4,550kt/a, up 73% from 2,630kt/a of newly added capacity in 2022. Except for January and April, all months from January to October witnessed new projects of PP. The expansion of new capacity mainly came from new refining and chemical integration units and light ends units. From the perspective of the change in capacity proportion, crude oil-based and PDH-based PP capacity proportion increased rapidly, while other feedstock-based capacity proportion declined slightly. As of October 2023, crude oil-based and PDH-based PP capacity rose by 2,650kt/a and 1,400kt/a respectively. Coal-based PP capacity increased by 500kt/a, which was released at Ningxia Baofeng Energy Group Phase III. Generally, crude oil-based and PDH-based PP capacity proportions further mounted up this year.
2023 (Jan-Oct) China PP Unit Capacity Expansion
China’s PP capacity is supposed to keep expanding in 2024, which will arouse more ample supply and higher self-sufficiency of PP in China. Some imported resources may be replaced accordingly. According to public data and SCI’s research and verification, SCI predicts that China’s newly added capacity may reach 7,850kt/a or so in 2024, higher than that in 2023. If the commissioning of proposed units in 2023, shown in the above table, is postponed to 2024, the PP capacity growth may further be intensive in 2024. However, the startup of new projects in 2024 may also be delayed according to the actual capacity construction.
In terms of feedstock sources, newly added units may mainly take crude oil and propane as feedstock, so crude oil-based and PDH-based capacity will probably occupy a larger proportion of the total and may affect PP prices more. As for enterprise nature, private enterprises are likely to see quicker capacity growth, squeezing the market shares of Sinopec and PetroChina constantly. The competition among enterprises will probably be more serious. For capacity layout, newly added capacity may be concentrated in North China, East China and South China, especially in South China where the competition may be intensified and some resources may flow to other regions.
End-2023-2024 China PP Capacity Expansion Forecast (Incomplete)
Remarks: Please contact us for complete capacity expansion plans in 2024, which may be shown in 2023-2024 China PP Market Annual Report and SCI PP Datapack in detail.
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