China PDH Capacity to Expand

In recent years, with the demand volume of propylene increasing, China’s propylene supply was quite short. Therefore, a large number of PDH units were put into operation in China.

In 2017, the average price spread between imported propane and propylene was about $420/mt, so the profits of PDH units were favorable. One set of ADH unit was put into operation in 2017 at Shandong Dongming Petrochemical Group. Up to March 2018, only Wanhua Chemical Group, Shandong Dongming Petrochemical Group, Shandong Chambroad Petrochemicals, Shandong Shenchi Chemical and Zibo Qixiang Tengda Chemical built PDH units. In mid-2014, the international crude oil prices crashed, weighing down the overall petrochemical industry. However, the annual average gross profits of PDH units were higher than RMB 1,000/mt. In 2016, the international crude oil prices started to recover and kept rising from H2, 2017, and the propylene prices climbed to a high level. Besides, the average gross profits of PDH units reached RMB 1,622/mt, so a large number of PDH units are planned to be put into operation in China.

According to the chart above, SCI reckons that China’s PDH capacity will continue to expand in the future.

Remarks: PDH is short for propane dehydrogenation; ADH is short for mixed alkane dehydrogenation.