Industry News
Cost side and strong expectations support the high and strong polypropylene market
Affected by high cost pressures in 2022, although nearly 3 million new production capacity of polypropylene has been released, the industry's capacity utilization rate has significantly declined, resulting in a lower overall production growth rate. The cost pressure in the polypropylene industry in 2023 has eased compared to last year, but it still partially suppresses the incremental performance of the supply side. On the one hand, with an increase in maintenance, the loss data has significantly increased; On the other hand, the phenomenon of delayed plans for new production capacity is still evident.
Looking back at the annual plan completion rate data of new domestic polypropylene production capacity, it is not difficult to find that in recent years, the plan completion rate of new domestic polypropylene production capacity has significantly decreased, basically maintaining around 50%. According to statistics, at the beginning of 2020, the planned new production capacity of polypropylene reached 7.35 million tons, but the actual production capacity was 3.8 million tons, with a completion rate of 52%. According to the latest 2023 data, the planned production volume at the beginning of the year reached 9.5 million tons, making it the year with the highest planned new production capacity in recent years. But as of mid September, the latest planned quantity has been adjusted to 7.1 million tons, with a production volume of 3.5 million tons and a completion rate of 49%.
September 2023 was the month with the highest planned investment in new production capacity during the year, with plans for five units of Donghua Energy (Maoming), Ningxia Baofeng Third Line, Ningbo Jinfa, Huizhou Lituo, and Huating Coal Industry. According to the latest situation, only Donghua Energy (Maoming)'s 400000 ton unit completed mass production in early September. In addition, the latest news is that Ningxia Baofeng has successfully produced qualified products for homopolymer injection molding; Ningbo Jinfa produces powder in the middle of the month, but the product is not yet qualified. The device and process are currently being debugged, and it is planned to produce granular materials by the end of the month; There is currently no clear message from the other two devices.
From the comparison trend of monthly polypropylene production data, it can be seen that this year's monthly polypropylene production has significantly improved compared to the same period last year. Except for the significant increase in damage and loss data in February, the production is lower than last year. In other months, polypropylene production is higher than the same period last year, especially in August, with a year-on-year increase of 20.88% in polypropylene production. According to the estimated data at the beginning of September, the year-on-year increase in polypropylene production during the month still exceeds 20%. However, as of the middle of the year, the statistical data shows that it is significantly lower than expected, mainly due to the failure to fulfill the new production capacity plan on time.
Overall, the cost side and strong expectations are still the main factors supporting the high and strong polypropylene market at this stage. However, the lack of supply side increment is also beneficial to the market trend to some extent. In the long run, the planned increase in polypropylene production capacity that has not been put into operation within the year is still as high as 3 million tons, so the long-term pressure on the polypropylene supply side is still significant.
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