In October, along with the continued decline in international crude oil prices, polypropylene futures prices are also down, the main contract PP1501 from the end of September near 10,340 yuan/ton fell to the current 9,400 yuan/ton line, a cumulative decline of 9% within months, the recent accelerated decline trend. Looking forward to the future market, under the combined effect of multiple negative and bearish factors such as abundant supply, weak demand and lower cost, the late polypropylene price will continue to be bearish, and the impact of the centralized production of coal to olefin units and the start of propane dehydrogenation projects on the polypropylene market will further appear.
Coal-to-olefin production peak approaching, PP supply and demand pattern or change. In July, Shaanxi Yanchang China Coal and China Coal Yulin Energy put into operation a total of 900,000 tons/year of polypropylene production capacity; In September, Shijiazhuang Refining and Chemical, Maoming Petrochemical and Shenhuining Coal Phase II had a total of 900,000 tons/year of polypropylene production capacity, that is to say, the third quarter of polypropylene annual production capacity increased by about 1.8 million tons, accounting for about 12% of the original capacity. Polypropylene, polypropylene quotes, polypropylene manufacturers. Due to the instability of new installations, the impact of new production capacity on the market in the third quarter is mainly reflected in suppressing market mentality, and the actual impact on supply is not large.
However, in October, the production of new units has gradually normalized, and the start-up load rate has significantly increased, and the impact of the third quarter of production on supply will be concentrated in the fourth quarter. In the later stage, the large-scale coal-to-olefin units of Pucheng Clean Energy and Ningxia Baofeng manufacturers have production plans, although the production of the units may be delayed, but the production peak of coal-to-olefin has arrived. The continuous release of new capacity will continue to increase supply significantly.
In contrast to the downstream consumption of polypropylene, this year's plastic knitting industry and copolymerization injection molding industry have appeared a significant lack of new orders, at the same time, due to the tight capital chain of small and medium-sized enterprises, the existence of unstable orders and other problems, downstream enterprises mostly adopt the purchase strategy of buy with use and compress inventory cycle, from this point of view, the later polypropylene downstream consumption is still difficult to improve.
In summary, with the continuous production of coal-to-olefin units, a large number of low-cost supplies have impacted the market, and the polypropylene market has entered a pattern of oversupply and demand, and the contradiction between supply and demand will have a long-term suppression effect on the price of polypropylene.
Propane dehydrogenation plants have been put into operation, and the price range of propylene has moved down. Under the influence of the shale gas revolution, the source of propylene supply is quietly changing. At present, about 61% of the world's propylene comes from the naphtha steam cracking process, which mainly produces ethylene, with propylene as a byproduct. Due to the large-scale application of shale gas, cracking manufacturers began to use a lot of ethane in the production of ethylene, so ethylene production raw materials from high-price naphtha to cheap ethane, which led to a significant reduction in the production of propylene by product, in the context of propylene may exist gaps and propane production surge, the propane dehydrogenation to propylene PDH process is highly sought after. In the long run, the production boom of propane dehydrogenation equipment conforms to the general trend of global energy structure adjustment, but due to the concentrated production of propane dehydrogenation equipment in China, coupled with the low price of propane, it will significantly lower the price fluctuation range of propylene in China.
In the third and fourth quarters of 2014, the annual capacity of the propane dehydrogenation plant put into operation is about 2 million tons, equivalent to 10% of the total output of propylene in 2013, and the follow-up effect of the intensive operation of the propane dehydrogenation plant will gradually appear.
In the short term, the gradual expansion of the current price spread and the equipment parking maintenance and other conditions or the polypropylene price decline trend is suspended, but in the medium and long term, the negative factors have a long-term effect on the price of polypropylene: first, the international oil price has not bottomed out; Second, the production of coal-to-olefin units is surging, and the contradiction between supply and demand is gradually amplified; Third, the propane dehydrogenation unit is put into intensive production, and the lower price of propylene will drive the cost of polypropylene down.
