China’s propylene supply to increase from H2 Oct on new start-ups

Focus article by Yeow Pei Lin

SINGAPORE (ICIS)–China’s propylene supply is expected to increase from the second half of October ahead of the restart of a major plant in Shandong and a slate of new capacities coming online which will impact the balance of the propylene and polypropylene (PP) in the domestic market, industry sources said.

Wanhua Chemical’s 750,000 tonne/year propane dehydrogenation (PDH) plant in Shandong is due to restart on around 20 October from a turnaround of more than 20 days.

This is expected to boost the supply of propylene in the merchant market in Shandong.

Ningbo Fuji Petrochemical is expected to conduct trial operations at its 600,000 tonne/year PDH plant in Zhejiang province on around 20 October.

If successful, the producer will be able to bring up its 400,000 tonne/year PP plant.

The new supplies will impact the balance of the propylene and PP markets in China.

On paper, Ningbo Fuji will a net propylene surplus of up to 200,000 tonnes/year based on the designed capacities of the integrated complex.

Haiwei Group is said to have resumed operations at its 500,000 tonne/year PDH unit in Hebei on 9 October following several days of unplanned outage.

The producer is still in the process of stabilising the plant, which started trial operations since July.

Prices for propylene spot cargoes into northeast Asia were higher in the week ended 14 October due to restocking activity amid firmer domestic prices in China, according to ICIS data.

But gains were limited by the uncertain supply and downstream demand outlook ahead of the start-up of new Chinese capacities, according to market sources.

Demand in the leading China market was centred on end October/early November arrival cargoes as some buyers delayed their purchases prior to the 1-7 October Golden Week holiday owing to the then softer market conditions, market sources said.

The local market was underpinned mainly by an upswing in the yuan downstream polypropylene (PP) prices on the back of limited PP flat yarn supply and strong gains on crude futures early in the week. The healthy propylene oxide (PO) margins supported the week’s price increase as well, they said.

Importers with sufficient stock preferred to wait out the price upswing due to the uncertain second-half October and November market outlook, the sources added.

Additional reporting by Nurluqman Suratman