China Propylene Industrial Chain to Remain Tepid in February
Prices and production profits of products in propylene industrial chain in January went up M-O-M, and operating rates showed ups and downs. However, influenced by high costs and tepid demand, the price transmission of the propylene industrial chain underperformed, so the industry profitability and operating rate in January 2023 declined notably Y-O-Y.
Prices of most products increased M-O-M but declined Y-O-Y.
Jan 2023 Propylene Industrial Chain Price Change Comparison
In January, prices of products in propylene industrial chain largely rose M-O-M but declined dramatically Y-O-Y. Therein, propane prices in Shandong rose by 11.5% M-O-M. Downstream users replenished stocks before and after the Spring Festival holiday, and imported propane supply was tight. Meanwhile, China’s domestic propane commercial volume shrank, and the international propane prices went up, lifting the overall propane prices. Given the tug of war between supply and demand, propylene prices in northern China were slightly higher than those in southern China, and the monthly average price of propylene inched down M-O-M. As for prices of propylene downstream products, PP powder prices slightly dropped, but acetone prices decreased by 14.83% M-O-M in the wake of ample supply. As for the Y-O-Y change, prices of products in propylene industrial chain went down from the same period of 2022.
Profits from producing most products in propylene industrial chain saw slight M-O-M increments but notably declined Y-O-Y.
Jan 2023 Propylene Industrial Chain Profit Change Comparison
Propane and methanol prices went up in January, so profits from producing propane-based and methanol-based propylene dwindled M-O-M. Meanwhile, profits from PP powder and phenolic ketone production decreased, and the decline in phenolic ketone production profits reached RMB 952/mt. Besides, profits from producing other products increased by RMB 100-400/mt. At the beginning of 2022, the overall propylene industrial chain experienced severe cost pressure, so the overall industrial chain profitability waned but remained positive. In January 2023, the propylene industrial chain profitability kept weakening with severe cost pressure and tepid demand, and the propylene industry profit became negative. Therein, profits from producing acrylic acid, ECH and phenolic ketone dropped dramatically, and the overall industry prosperity degree went down.
Unit operating rates showed M-O-M ups and downs but decreased Y-O-Y.
Jan 2023 Propylene Industrial Chain Unit Operating Rate Change Comparison
Operating rates of NBA, 2-EH, acrylic acid and ECH units in January increased dramatically M-O-M, and the operating rate of acrylonitrile unit declined notably M-O-M, mainly due to the unit operating rate adjustment and shutdown. Influenced by capacity expansion and profit shrinkage, operating rates of PO and acrylonitrile units decreased by about 15% Y-O-Y. Besides, operating rates of ECH, acrylic acid, PP powder and propylene units went down Y-O-Y. Accordingly, the decline in industrial chain profitability exerted notable impacts on operation enthusiasm.
In February, it is estimated that prices of most products in propylene industrial chain will rise with the demand recovery after the Spring Festival holiday. As for the industry profitability, profits from producing propylene, PP and phenolic ketone may remain negative, and those from acrylonitrile, acrylic acid and other chemical products production are likely to slightly improve. Curbed by the relatively high production costs and tepid demand, it is estimated that the price transmission of the overall propylene industrial chain will probably see limited improvement.
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