China PE, PP may extend falls on supply glut ahead of holiday
Doreen Zhao
24-Sep-2014
Focus story by Doreen Zhao
SINGAPORE
(ICIS)–Spot polyethylene (PE) and polypropylene (PP) prices
in the Chinese domestic market may continue to fall into
October, as scheduled plant start-ups will boost supply with
no expected strong recovery in demand, industry sources said
on Wednesday.
China’s polymer inventory is expected to increase early next month, when most players are out of the market for the week-long National Day holiday, and may prompt producers to cut offers, they said.
On 23 September, linear low density PE (LLDPE) film prices for locally produced cargoes were assessed at yuan (CNY) 10,200-10,750/tonne ($1,661-1,751/tonne), down by CNY900-1,000/tonne from a month ago, according to ICIS data.
PP flat yarn prices, on the other hand, stood at CNY10,850-11,100/tonne, down by CNY300/tonne over the same period, the data showed.
China’s PE-PP capacity is due to increase by a total of 600,000 tonnes/year in October, with scheduled start-ups of Ningxia Baofeng Energy’s plants in the Ningxia Hui autonomous region, industry sources said.
The new PE and PP plants have the same 300,000 tonne/year capacity.
In the third quarter alone, China added 900,000 tonnes/year in new PE capacity, and 1.8m tonnes/year of PP capacity, bringing the total PE and PP capacities so far to 14.5m tonnes tonnes/year and 15.5m tonnes/year, respectively. (Please see tables below)
Some domestic new PE and PP plants which were put into operation in the third quarter of 2014 would also weigh on the market, including Shaanxi Yanchang Chinacoal Yulin Energy & Chemical, China Coal Shaanxi Yulin Energy & Chemical, Maoming Petrochemical and Shijiazhuang Refining & Chemical Co, an eastern-based trader said.
Softening feedstock propylene spot prices in Asia was expected to lead some regional producers to reduce their PP offers for October shipment, a South Korean PP producer said.
Propylene prices have fallen by $100/tonne over a two-month period to $1,350-1,370/tonne CFR (cost and freight) NE (northeast) Asia on 19 September, according to ICIS data.
Compounding the pressure on domestic polymer prices is increased availability of imported material, given weak demand and falling prices in the Turkish, Indian and southeast Asian markets, an east China-based trader said.
On 17 September, LLDPE C4 prices were assessed at $1,560-1,600/tonne CFR Turkey (Middle East Origin), down by $40-50/tonne from a month ago, according to ICIS data.
PP flat yarn prices were assessed at $1,520-1,580/tonne CFR Turkey (Indian and Middle East Origin) on 17 September, down by $50-80/tonne from one month ago, according to ICIS data.
Tight credit conditions in China also continue to weigh down on the domestic market, industry sources said.
Some market players expect China’s demand for polymers to improve slightly on restocking activities in October, ahead of yearend holidays, when exports of finished goods typically strengthen.
New PE, PP plant start-ups in China for 2014
|
Company |
Location |
Product |
Nameplate capacity (tonnes/year) |
Actual/expected start-up in 2014 |
|
Sichuan Petrochemical |
Sichuan |
LLDPE |
300,000 |
March |
|
Sichuan Petrochemical |
Sichuan |
HDPE |
300,000 |
March |
|
Fujian Refining & Petrochemical |
Fujian |
HDPE/LLDPE |
100,000 |
April |
|
Shaanxi Yanchang Chinacoal Yulin Energy & Chemical |
Shaanxi |
HDPE |
300,000 |
July |
|
Shaanxi Yanchang Chinacoal Yulin Energy & Chemical |
Shaanxi |
LLDPE |
300,000 |
July |
|
China Coal Shaanxi Yulin Energy & Chemical |
Shaanxi |
HDPE/LLDPE |
300,000 |
July |
|
Ningxia Baofeng Energy |
Ningxia Hui Autonomous Region |
HDPE/LLDPE |
300,000 |
October |
|
Pucheng Clean Energy Chemical |
Shaanxi |
HDPE/LLDPE |
300,000 |
November |
|
Total |
|
|
2,200,000 |
|
Company |
Location |
Product |
Nameplate capacity (tonnes/year) |
Actual/expected start-up in 2014 |
|
Fujian Refining & Petrochemical |
Fujian |
PP |
150,000 |
February |
|
Sichuan Petrochemical |
Sichuan |
PP |
450,000 |
March |
|
Sinochem Quanzhou |
Fujian |
PP |
200,000 |
May |
|
Shaanxi Yanchang Chinacoal Yulin Energy & Chemical |
Shaanxi |
PP line1 |
300,000 |
July |
|
Shaanxi Yanchang Chinacoal Yulin Energy & Chemical |
Shaanxi |
PP line 2 |
300,000 |
July |
|
China Coal Shaanxi Yulin Energy & Chemical |
Shaanxi |
PP |
300,000 |
July |
|
Maoming Petrochemical |
Guangdong |
PP |
200,000 |
September |
|
Shijiazhuang Refining & Chemical Co |
Hebei |
PP |
200,000 |
September |
|
Shenhua Ningxia Coal Industry |
Ningxia Hui Autonomous Region |
PP |
500,000 |
September |
|
Ningxia Baofeng Energy |
Ningxia Hui Autonomous Region |
PP |
300,000 |
October |
|
Pucheng Clean Energy Chemical |
Shaanxi |
PP |
400,000 |
November |
|
Guangzhou Petrochemical* |
Guangdong |
PP |
200,000 |
Q4 |
|
Oriental Energy* |
Jiangsu |
PP |
400,000 |
end-2014 |
|
Shandong Shenda Chemical |
Shandong |
PP |
200,000 |
end-2014 |
|
Total |
|
|
4,100,000 |
*latest additions to the list
($1 = CNY6.14)
Additional reporting by Summer Zhang and Lizzie Yu
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