VIENNA (ICIS)--The US-China trade war could threaten feedstock supply for the newly-built propane dehydrogenation (PDH) units in China, an executive said on Thursday.
There have been heavy investments in polypropylene (PP) plants in China, with almost 9.5m tonnes of capacity growth by 2020.
Sanjay Moolji, director for polymers and PP at US-headquartered Tricon Energy, made his remarks when he was addressing the new developments in the business models for chemicals trading and distribution.
He was speaking at the 8th ICIS World Poylolefins Conference.
Much of the PP investments in China were based on the steady supply of competitive feedstock, with 20-25% of Chinese propane imports originating from the US, said Moolji.
Propane is a natural gas liquid (NGL), currently abundant in the US due to the shale gas boom. PP can be obtained through the PDH process.
However, due to the ongoing trade tensions between the two largest world economies, China has “reduced importing” from the US, said Moolji, pictured.
He went on to describe the current situation as a “change in dynamics” for PDH production in China, with the cost of production now significantly higher.
However, despite the feedstock challenges and changes in the cost of production, new PP capacity in China is still a significant change in the market.
“Chinese polypropylene [is] a new force in the making in the international arena,” said Moolji.
Meanwhile, the reduction of dependency from China on the wider marker was described as a “paradigm shift” for the global PP market, said Moolji.
PP is used for packaging, ropes, carpets, plastic parts, loudspeakers and automotive parts.
The 8th World Polyolefins Conference runs in Vienna on 3-4 April.
Top picture: A PDH unit in China
Pictures sources: Clariant and Tricon Energy
Clarification: Re-casts paragraphs 2, 5 and 7