How Will SCO Summit Impact the Propylene Industry?

Preface

Shanghai Cooperation Organization Summit (hereinafter referred to as “SCO summit”) will be held from June 9 to June 11, 2018, which will impact the chemical industry a lot. SCI conducts researches on propylene refineries and its downstream producers, which shows that SCO summit will have a slight effect on the production restriction or cutting of refineries. In other words, the SCO summit is likely to support the propylene market.

Most of Shandong propylene refineries concentrated in Dongying, Zibo and Weifang, and the minority of them located in Binzhou, Rizhao, Heze, Yantai, Qingdao, etc. Participants should focus on the impact on refineries in Yantai, Weifang, Rizhao and Zibo, all of which are at a close distance from Qingdao.

The supply volume of propylene at Shandong independent refineries is estimated to reduce by 300mt per day. On the whole, the supply of propylene decreases a little, and the inventory at Shandong independent refineries is obviously low, which will boost the propylene market.

Some downstream producers arranged overhauls, but they were postponed due to the SCO summit. The PO and oxo-alcohols producers are running their units at high operating rates. Underpinned by the strong downstream demand, propylene refineries increased their offers to RMB 8,650/mt.

Generally speaking, both the decrease in propylene supply and delay of downstream maintenance boomed the propylene market. However, SCI predicts that production restriction, traffic restriction and environmental protection inspection will restrict the development of plastic weaving market. Moreover, the PP powder market fails to develop smoothly, so the end demand for propylene fails to improve. Participants can focus on the indirect impact of the end demand on propylene market.