Industry News
The fundamentals of the propylene market are relatively bearish, with weak price fluctuations
Market trend review:
In the first half of the month, PDH devices such as Tianhong Chemical fluctuated, causing manufacturers to suspend propylene spot and contract supply. The supply in the Shandong market tightened, and downstream contract users outsourced raw materials. Coupled with the operation of the Jingbo PP device, the market sentiment rebounded, and the trading atmosphere improved. The inventory position of factories decreased, and the quotation continued to be slightly upward.
In mid month, a certain PDH unit in North China shut down. Coupled with the previous shutdown of the Northeast PDH, the inflow of propylene into the surrounding area decreased, and the supply pattern continued to tighten. In addition, some downstream users stocked up before the holiday, and demand follow-up was still acceptable. The supply and demand side supported the continued upward trend of the propylene market.
In the latter half of the month, the price of propylene in the market rose and fell, and the parking facilities of PDH in North China resumed one after another. The inflow of propylene in the surrounding areas increased, and the supply side support in the market weakened. In addition, the profitability of powder materials was poor, and the high price transactions in the market were weak. The quoted prices were loose and downward, and downstream users were wait-and-see, resulting in a general trading atmosphere in the market.
In terms of profit:
In January 2024, the main production processes of propylene in China showed sluggish profitability and significant monthly profit losses. The average monthly profit of the oil to propylene route was -692 yuan/ton, compared to -470 yuan/ton in December last year, a month on month decrease of 47%; The average monthly profit of PDH production process is -508 yuan/ton, compared to -368 yuan/ton in December last year, a decrease of 28%; The average monthly profit from methanol to propylene is -733 yuan/ton, compared to -407 yuan/ton in December last year, a decrease of 80%; The monthly average profit of coal to propylene is -543 yuan/ton, a decrease of 5 yuan/ton from the average profit of -538 yuan/ton in December last year.
Specifically, in terms of cost, the prices of international crude oil, East China methanol, and other raw materials have increased compared to the average price in December, while the monthly average price of domestic propylene market has decreased month on month. Production costs have increased but market prices have decreased, leading to a weakening of the profitability of oil to oil and methanol to propylene processes; In terms of PDH, although the average price of imported propane fell month on month in January and the cost pressure of propane dehydrogenation was slightly reduced, the cost reduction was not as negative as propylene. Overall, the profit situation of PDH1 was not as good as last month; In terms of coal to propylene production, both thermal coal and propylene market prices have declined, and under hedging, the month on month profitability has not fluctuated significantly.
Looking ahead to the future:
It is expected that the fundamentals of the propylene market will be relatively bearish in February, and market prices may fluctuate weakly.
In terms of crude oil, with the Chinese Spring Festival holiday in February and the global seasonal consumption off-season, global crude oil demand may be weak overall, and the geopolitical situation remains uncertain. There may be room for a decline in the international crude oil market in February, but for propylene, cost pressure may still be high.
On the supply side, some PDH parking facilities in Shandong are planned to restart after the year, and the overall expected increase in propylene commodity volume; In the East and South China regions, some early parking devices are expected to start operating after the year. There is an expectation for maintenance of the PDH device at a large factory in Shandong near the end of February, but the specific maintenance time needs to be followed up. In terms of new devices, PDH devices such as Ningbo Jinfa Phase II and Fujian Meide Phase II may be put into operation after the holiday.
On the demand side, downstream stocking has basically ended before the holiday, and business owners follow up on urgent needs, mainly focusing on buying on dips; After the holiday, some downstream users may have a demand for restocking, but the profits of powder and terminal products are difficult to be optimistic, which may drag down the progress of downstream market returns. In terms of downstream chemical industry, after the Spring Festival holiday, the Qixiang Tengda PO plant plans to restart, and the Lihua Yiwei Yuan PO plant is expected to be put into operation. If it is put into operation as scheduled, the self use of propylene in the factory will increase, and the local propylene spot quantity may correspondingly decrease.
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