The hottest propylene is expanding or facing overc

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Propylene expansion is rising or facing overcapacity

propylene expansion is rising or facing overcapacity

April 17, 2019

in 2018, with the production of new units in Northeast Asia, North America and the Middle East, the expansion of propylene industry is at a historical high. Rising oil prices and tight supply and demand have driven propylene prices to a four-year high

in 2019, the world's new propylene production capacity mainly came from Northeast Asia, and the new scale reached another record high for Chinese coatings. With the lightweight of ethylene raw materials, propylene production capacity growth is no longer closely followed by ethylene, and the low sulfur marine fuel policy will lead to the reduction of propylene supply in refineries. The propylene industry chain in Northeast Asia continues to expand rapidly, while the Middle East slows down, and North America and Western Europe basically stagnate. The world propylene industry chain will build a new trade balance. Due to the differentiation of propylene cost in various regions of the world and the high price of polypropylene, the overall profit of the world propylene industry chain increased slightly and the boom continued

China has ushered in the peak of propylene capacity expansion in recent years, and all routes have new capacity, of which propane dehydrogenation (PDH) and coal to olefin (CTO) have significantly increased capacity with the help of cost advantages. Propylene capacity exceeds equivalent consumption for the first time, and is about to face overcapacity. Driven by the commissioning of PDH in eastern China and CTO in Western China, the expansion rate of propylene production capacity in China is at a high level in recent years. However, Sino US trade frictions have pushed up the cost of PDH raw materials and increased project variables. Due to the improvement of refining capacity of Shandong local refinery, the propylene trading volume in the region is gradually enlarged, and the discourse power of propylene price in Shandong market is expected to be further enhanced

in 2019, propylene equivalent consumption increased steadily, but the growth rate continued to slow down. Polypropylene, propylene oxide and acrylonitrile were the three downstream products with rapid growth, and the proportion of structure increased slightly; Acetone and acrylic acid accounted for the same proportion as in 2017; The proportion of butyl octanol decreased slightly

the world propylene price hit a new high last year

in terms of production capacity, the world propylene production capacity experienced rapid expansion from 2014 to 2016 and accelerated again in 2018 after a brief slowdown in 2017. In 2018, Asia was rich in propylene raw materials, and almost all production lines had new production capacity, mainly from China, South Korea, India, Malaysia, Vietnam, etc., with the new scale ranking first in the world. In North America, the light-weight process of ethylene raw materials is accelerated, and the new capacity of propylene from cracking unit is less. The Middle East is rich in light hydrocarbon resources, and the new production capacity mainly comes from naphtha cracking units. This route accounts for more than 50% of the total capacity of the region. Western Europe is also dominated by cracked propylene, while catalytic cracking capacity has hardly increased

in terms of consumption, the growth rate of propylene consumption in 2018 was higher than that in the previous two years, and the new consumption was at a historically high level. Emerging economies have become the driving force for propylene consumption growth. Global propylene consumption is mainly used to produce polypropylene, propylene oxide, acrylonitrile, acrylic acid, butyl octanol, isopropyl * and other products. From the perspective of the proportion of downstream product structure, polypropylene is the downstream derivative of propylene *, accounting for 65.7% of the global propylene consumption in 2018, an increase of 0.7 percentage points over 2017. The proportion of propylene oxide, acrylonitrile, acetone and acrylic acid decreased by 0.1 percentage points, and the proportion of butyl octanol decreased by 0.2 percentage points

the growth of polypropylene consumption is mainly driven by the rapid economic development of Asia Pacific region dominated by China, as well as many emerging economies in Central Europe and the Middle East. Among them, the Asia Pacific region is driven by internal demand, and the Middle East region is driven by plastic exports. Polypropylene consumption in mature economies such as North America and Western Europe has increased steadily, but the growth rate is relatively slow. In terms of the new consumption of polypropylene in 2018, it was 2.28 million tons in Northeast Asia, 520000 tons in India and Pakistan, 330000 tons in Southeast Asia, and less than 200000 tons in others

affected by crude oil prices, supply and downstream consumption, propylene hit a four-year high in 2018

in 2018, the rise in crude oil prices, tight supply in North America and Northeast Asia, and strong global demand for polypropylene contributed to the rise in propylene prices. In the United States, there is only one set of propylene plant with high cost, long cycle and low efficiency in the 75 million ton/year PDH, and the propylene consumption growth rate is faster than the supply growth rate, resulting in tight supply in North America. The new production capacity in Northeast Asia is dominated by China, but most of the units were put into operation at the end of the year, and the output has not been released. In addition, due to the maintenance of Zhenhai Refining and Chemical Co., Ltd. and Fujian Refining and Chemical Co., Ltd. in China, the strong downstream demand has increased the propylene gap

In addition to meeting the necessary military defense needs, the construction of Nansha Islands and reefs in China is more abundant in propylene sources

in 2018, China's propylene production capacity was 34.83 million tons/year, with an output of 31.4 million tons, an increase of 5.5% and 9.2% respectively over 2017; The equivalent consumption was 40.1 million tons, an increase of 7% over the previous year

in China's new production capacity in the past year, the non-traditional route of propylene increased significantly. PDH ushered in the investment peak due to its obvious cost advantage, and the proportion of device structure increased to 18%. In recent years, the source of propylene in China has become more abundant, and the units of refinery catalytic cracking to propylene, naphtha cracking to propylene, PDH, methanol to olefin (MTO), CTO and other routes have been put into operation. In 2018, the new capacity of propylene was 1.8 million tons/year. Due to the large increase in methanol price in the past two years, some methanol to propylene (MTP) units are in a long-term shutdown state, and the operating rate of MTO units in the East has also been reduced. MTO projects such as Jilin Cornell have been put into operation late. There was no new capacity of MTO from 2017 to 2018. In terms of the proportion of plant structure, the proportion of PDH and CTO increased to 18% and 14% respectively, while the proportion of traditional routes of oil refining and naphtha decreased to about 57%

at the same time, although the growth rate of propylene equivalent consumption has slowed down year by year since 2015, the annual growth rate of about 7% in 2018 was higher than GDP, which was in a period of rapid growth. The downstream demand for propylene is dominated by polypropylene, which accounts for 67%, slightly 1.3 percentage points higher than the global share. The production of new units of non naphtha routes such as coal chemical industry has greatly increased the domestic polypropylene production capacity. In 2018, the net increased production capacity was 1.25 million tons/year, to 24.73 million tons/year, and the output reached 22million tons. The demand for polypropylene, such as the ban on waste and catering takeout, promoted the demand growth. In 2018, the demand reached 26.4 million tons, with an annual increase of more than 8%. Driven by downstream demand, the annual consumption of propylene oxide, acrylonitrile and butyl octanol also maintained a high growth rate of more than 6%. Due to the impact of environmental protection, the annual consumption of acetone and acrylic acid increased slowly, with a growth rate of 2% - 5%

it should be noted that Shandong local refining company has further strengthened its voice in propylene pricing. The propylene market in East China refers to the monthly quotation of Sinopec, while the propylene market in Shandong has become the benchmark price for propylene trading in North China, Northwest China, Northeast China and other regions because of its large trading volume and frequent transactions. Shandong propylene price plus freight is usually adopted. China's imported propylene mainly comes from South Korea, Japan and Taiwan, and the import price is dominated by these countries and regions

since the liberalization of China's crude oil import right and crude oil import use right in 2015, the catalytic cracking capacity of Shandong local refinery has increased rapidly, and the propylene capacity has increased accordingly. 70% - 80% of the propylene sold by Shandong local refinery is sold abroad. With the increase of the operating rate of the local refinery, the amount of propylene sold abroad continues to increase, which further strengthens the pricing voice in the Shandong market

? The domestic propylene supply pattern changed in 2019

it is estimated that the propylene capacity will reach 41.73 million tons/year in 2019, an increase of more than 19% over the previous year; The output was 34 million tons, and the equivalent consumption reached 42.1 million tons, an increase of 8.3% and 5% respectively over the previous year. China's Propylene industry is about to face overcapacity

after experiencing the peak of capacity expansion from 2014 to 2016 and a short decline in 2017, 2019 will usher in a new record high of propylene production capacity in recent years, and it is expected to add 5.86 million tons of capacity per year. Propylene production lines continue to diversify, with PDH line taking the lead in new capacity. However, the growth rate of propylene demand is slower than that of production capacity, and the self-sufficiency rate will increase again. The domestic propylene capacity will exceed the equivalent consumption for the first time, and will soon face the situation of overcapacity

in addition to the new capacity of PDH route, the coal to olefin (CTO) route has also warmed up, and its new capacity in 2019 is at a high level over the years. In recent years, the rise in international crude oil prices has led to the vigorous development of CTOs in China, especially in the western region, which is rich in coal resources. Four CTO industrial bases have been formed, namely, Ordos in Inner Mongolia, Yulin in Shaanxi, Ningdong in Ningxia and Zhundong in Xinjiang. By the end of 2018, the capacity of CTO device was about 4.8 million tons/year. In 2019, with the commissioning of Jiutai energy, Zhongan United coal chemical industry and Ningxia Baofeng, the propylene production capacity will be increased by 900000 tons/year

the rise in crude oil prices and the abundance of propane resources have led to the rearrangement of the costs of propylene routes and the obvious enhancement of the advantages of coal to olefins

in 2018, the cost of naphtha route has been much higher than that of CTO, with a difference of about 1800 yuan/ton of olefins. With the rise of crude oil prices and methanol prices, it is expected that the costs of various routes will be rearranged in 2019: Western CTO < Eastern PDH < Eastern naphtha cracking < Eastern MTO, and the cost difference between naphtha cracking and CTO will exceed 2000 yuan/ton of olefins

at the same time, the new propylene production capacity of emerging refining and chemical enterprises should not be ignored. Stimulated by a series of reform dividends such as the liberalization of crude oil import and the decentralization of approval authority, emerging refining and chemical enterprises obtained capital operations such as bond financing and equity financing through banks, opening up capital channels. In 2019, China ushered in large refining and chemical integration projects such as Zhejiang Petrochemical and Bora group, which are expected to release a total of 1.9 million tons of propylene per year

however, it should be noted that the growth rate of domestic propylene demand continues to be lower than that of supply. Propylene equivalent consumption increased steadily in 2019, but the growth rate continued to slow to 5%

downstream development trends

polypropylene: express delivery, takeout and automobile lightweight are still the demand drivers

2018 is the peak year of polypropylene capacity expansion, with polypropylene capacity of 24.73 million tons/year, new capacity of 1.25 million tons/year and output of 22 million tons. The new apparent consumption of polypropylene is at a historical high, with an annual growth rate of 8.7%, and about 26.4 million tons in the whole year

compared with developed countries, low-end products account for a relatively high proportion of polypropylene consumption in China, such as woven products, general injection molding products and general packaging, especially woven products, which account for a significantly higher proportion than European and American countries and regions. In the past three years, domestic polypropylene production technology has been greatly developed in the field of special materials, and a series of homopolymer tube materials and medical materials have been developed, reducing the dependence on some high-end imported materials

there are three main factors driving the growth of polypropylene consumption: the catering takeout market continued to grow at an annual growth rate of 33% in 2018; The development of express delivery industry and the upgrading of plastic packaging have broadened the field of material application and supported the rapid growth of the packaging industry; The demand for special injection molding materials in automobile lightweight, household appliances and other industries has increased significantly

the pace of polypropylene capacity expansion will further accelerate in 2019, but there is still a large gap. Polypropylene production capacity will increase by 4.85 million tons per year to 29.58 million tons per year in 2019, mainly from Zhejiang Petrochemical (900000 tons per year), Liaoning Bora (600000 tons per year) and other enterprises, but most of the projects were put into operation in the fourth quarter, making limited contribution to the supply of this year

propylene oxide: after rapid expansion, the number of supply subjects increases.

as a leading industry in the national economy, the new propylene oxide production capacity in 2018 was 500000 tons per year, to 3.91 million tons per year, but the actual new output supply was only 175000 tons, to 2.9 million tons. The apparent consumption of propylene oxide was 3.16 million tons, an increase of about 7% over the previous year, and the growth rate was slightly higher than that of the previous year

propylene oxide industry in 2019

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