Shandong Propylene Prices Rebound with Intensive Unit SD and RS
There were intensive propylene unit shutdowns and restarts, especially PDH units. Although some units in Shandong were restarted in succession, some units were restarted temporarily and then shut down, offsetting some bearish impacts and rapidly lifting propylene prices in Shandong. In the short term, it is estimated that propylene prices in Shandong will probably fluctuate upward. With rising propylene supply, it is predicted that propylene prices may go down in the long run.
Propylene prices went up in H1 February with unexpected unit shutdown and replenishment before the Spring Festival holiday.
Two PDH units in North China were restarted in H2 January 2024, and the PP unit at Hebei Haiwei Petrochemical was shut down. Accordingly, more propylene resources flowed into Shandong from North China. Considering that the operating rate of the PDH unit at Tianjin Bohai Chemical Industry Group was not high before the Spring Festival holiday, and there was no commercial propylene at this company, exerting limited impacts on Shandong propylene market. Moreover, the PDH unit at Jinneng Chemical (Qingdao) Phase I was shut down temporarily, and the MTO unit at LUXI Group was shut down before the holiday. Downstream users stocked up in advance, supporting the overall propylene demand. Accordingly, the overall propylene supply and demand fundamentals performed well in H1 February, and propylene prices registered an upward trend. As of February 9, 2024, propylene prices in Shandong averaged RMB 6,940/mt, up 2.06% from the beginning of February.
Propylene prices moved downward with expected supply increment and sluggish demand.
Entering the Spring Festival holiday, the operating rate of the PDH unit at Tianjin Bohai Chemical Industry Group gradually reached 100%, and the company started selling propylene resources to the market. Accordingly, more propylene resources flowed into Shandong from North China. With the transportation recovering after the holiday, more propylene resources flowed into Shandong from Northeast China. Moreover, the propylene inventory at producers accumulated during the holiday, dragging down propylene prices. The PDH unit at Lihuayi Weiyuan Chemical was shut down for maintenance in H2 February, but its downstream units mainly consumed feedstock inventory. This company did not purchase propylene from the market, exerting limited impacts on propylene market. At the same time, gas separation units at Dongying Eastar (Group) Chemical and Wudi Xinyue Chemical took overhauls. However, Dongying Eastar (Group) Chemical sold propylene inventory to the market, and Wudi Xinyue Chemical mainly consumed propylene resources from Northeast China, exerting limited impacts on propylene market.
The propylene supply exerted pressure on the market in H2 February, and the overall propylene demand underperformed, resulting in declines in propylene prices after the Spring Festival holiday. End plants resumed production slowly after the holiday, and PP and some chemical plants experienced cost pressure, weighing down the demand for propylene. Given the restart plan of overhauled PDH units in Shandong in end-February and March, most market participants adopted bearish attitudes to propylene supply, and downstream users showed low interest in purchasing feedstock. Some downstream users replenished stocks after the holiday, slightly propping up propylene prices. However, the overall propylene demand witnessed limited improvements. As of February 29, 2024, propylene prices in Shandong averaged RMB 6,880/mt, down 0.86% from the highest level in H2 February.
Propylene prices saw notable increments in H1 March with bullish factors.
From end-February to early March, the gas separation unit at Shandong Jincheng Petrochemical and PDH units at Zibo Qixiang Tengda Chemical, Lihuayi Weiyuan Chemical, Shandong Tianhong Chemical and Zibo Xintai Petrochemical were restarted in succession, so the overall propylene supply increased as expected, dragging down propylene prices in Shandong. As of March 3, some low propylene offers in Shandong reached RMB 6,820/mt. Entering this week, PDH units at Zibo Xintai Petrochemical and Lihuayi Weiyuan Chemical were shut down for maintenance, and Lihuayi Weiyuan Chemical needed to purchase propylene resources from the market, propping up propylene prices. As of March 6, propylene prices in Shandong averaged RMB 7,075/mt, up 3.28% from the low level at the beginning of this week.
Propylene prices may go up in the short term but may fluctuate downward in the long run.
In the short term, the propylene inventory at producers in Shandong may remain relatively low, and propylene resources at traders may be relatively ample. Accordingly, producers are likely to raise propylene offers. The PDH unit maintenance at Lihuayi Weiyuan Chemical may still give support to the propylene market, and the dehydrogenation unit at the new plant of Shandong Shenchi Chemical takes overhaul. Besides, the PDH unit at Jinneng Chemical (Qingdao) Phase I may be shut down for maintenance soon, supporting propylene market. With propylene prices rising rapidly, the cost pressure on propylene downstream plants may intensify, and some downstream users may show resistance to high-priced resources, hindering the demand for propylene. Overall, it is estimated that propylene prices may go up in the short term, but the price increment may narrow gradually.
In the long run, the overall propylene supply is likely to increase with the PDH unit maintenance at Lihuayi Weiyuan Chemical coming to an end. Operating rates of PDH units at Zibo Qixiang Tengda Chemical and Shandong Tianhong Chemical may rise, and the MTO unit at LUXI Group and the PDH unit at Shandong Binhua New Material may be restarted. Moreover, the maintenance of gas separation units at Wudi Xinyue Chemical and Dongying Eastar (Group) Chemical and the dehydrogenation unit at Shandong Shenchi Chemical may gradually complete, and the 400kt/a PDH unit at Shandong Zhonghai Fine Chemical may be put into use in end-March. Entering April, the 900kt/a PDH unit at Jinneng Chemical (Qingdao) Phase II and the 750kt/a PDH unit at China Zhenhua Oil may start test run, and the PDH unit at Liaoning Kingfa Technology may be restarted. Accordingly, the overall propylene supply is likely to increase, and it is predicted that propylene prices will probably fall in the long term.
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