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Downstream Demand——Foot-Dragger to PO

PO market is in a new round of fluctuation ascribed to environmental protection policies, downstream demand, and additional PO capacity.
Polypropylene suffers lower futures whilst powder market remains loss, with several factories shut down to surpass the propylene price. Notwithstanding the current high price, propylene is likely to move down in the near future. Liquefied chlorine maintains paying for the selling in north China market, and the low-price status is to sustain.
Feedstocks
In the short-term, given that the price is likely to keep stable plus propylene even go down, feedstocks will not give an impetus to the growth of PO.
Inventory
Over last month, PO factories have been keeping the inventory of PO. Generally, plants in north China sustain inventory less than 1000 tons and inventory in east China can be consumed within two days. Such low inventory gives no contribution to the depression, and PO factories all strive to control inventory to relieve the speed of decline.
Capacity
Tianjin Dagu 150 kt/year PO facility is shut down on Apr. 29 due to pressure from environmental protection, and has not been restarted yet. The facility is expected to restart after the Belt and Road Forum.
Jilin Shenhua starts two sets of equipment with a total capacity of 200 kt/year, and the operation load is mounting.
Huntsman Jinlin is to start its 24 kt/year equipment. It is anticipated to be he put into trail production in late May or early Jun, and formal production in late Jun.
Shandong Sanyue additional 80 kt/year equipment has come to have outputs last week.
Shandong Daze starts another set of 50 kt/year facility in the middle May.
Hunan Chengsheng 100 kt/year equipment will be started in early Jun.
June will see a total of 92 kt/year additional capacity, compared with the present one.
Additional capacity needs a period of time to be digested. Also, the price will further slip down, if the new participants cannot be allied with the present one to control inventory.
Demand
May and June are the inevitable slack season of foaming plats. Adding to environmental protection policies, production of SMEs in downstream is constrained, bringing flexible and rigid PU foam polyols to the downturn. Considering the downtrend of PO, polyether polyols plants tend to purchase on demand and lower their load to 60%-70%. As such, demand is the major foot-dragger to PO and it can barely be solve within a short time.
Taking all mentioned above into consideration, PUdaily suggests that PO is to move down in long-term.