Q1, 2022 PP Prices Climbed on High Feedstock Cost & Falling Supply
Highlights: China’s PP (polypropylene) mainstream prices mounted up in Q1 of 2022 on the back of firm feedstock cost and notably decreasing supply. But the insipid demand put a dampener on the trading activities. At present, market players pay attention to the demand recovery after logistics return to normal and the crude oil price trend.
High feedstock costs pushed up PP prices in Q1, 2022.
In Q2, 2021, many of China’s LDPE units will undergo turnarounds. 2022 is not a big year for intensive maintenance, so many units will be only shut down for small turnarounds, except for the LDPE unit at Sinopec Maoming Petrochemical. In addition, the products produced by the 400kt/a unit at Zhejiang Petroleum & Chemical will gradually enter the market, so the supply of China-origin LDPE will increase in Q2, 2022.
As for import volume, the import volume of LDPE from January to February dropped by 11.9% Y-O-Y, but the imported resources still accounted for a high market share. In early 2022, the international crude oil price was at a high level, giving some support to the LDPE market from the cost side. Foreign suppliers tended to stay firm on the prices amid the cost pressure, so the import volume seemed hard to improve.
In Q2, 2022, the production of the LDPE unit at Zhejiang Petroleum & Chemical will gradually enter the market. In addition, 2022 is not a big year for intensive maintenance, so many units will be only shut down for small turnarounds. Therefore, the output is expected to increase compared to last year. As for import volume, it is predicted that the import volume will remain stable. The current inventory level at ports at traders was at a medium-to-high level. Besides, transportation in some regions is hindered, dampening the consumption of feedstock. Overall, it will be difficult for the LDPE market to improve in Q2, and players need to pay attention to the crude oil fluctuations and the market resources digestion.
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