In 2019, the world’s new propylene production capacity was mainly from Northeast Asia, and the new scale reached a record high. With the lighter weight of ethylene raw materials, propylene production capacity is no longer in close proximity to ethylene, and the low-sulfur marine fuel policy will result in a reduction in refinery propylene supply. The propylene industry chain in Northeast Asia continues to expand rapidly, while the Middle East slows down, North America and Western Europe are basically stagnant, and the world propylene industry chain will build a new trade balance. Due to the differential differentiation of propylene costs and the high price of polypropylene in various regions of the world, the overall profit of the world propylene industry chain has increased slightly, and the prosperity has continued.
China has ushered in the peak of propylene production capacity expansion in recent years, and all routes have new capacity. Among them, propane dehydrogenation (PDH) and coal olefins (CTO) have increased significantly through cost advantage, and propylene production capacity is the first to exceed equivalent consumption. Volume, will soon face overcapacity. Driven by the production of PDH in the eastern part of China and the CTO in the west, the expansion rate of China’s propylene production capacity is at a high level in recent years. However, Sino-US trade friction has pushed up the cost of PDH raw materials and the project variables have increased. Due to the improvement of the refining capacity of Shandong refining, the trading volume of propylene in the region has gradually enlarged, and the discourse power of propylene prices in Shandong market is expected to further increase.
In 2019, propylene equivalent consumption increased steadily, but the growth rate continued to slow down. Polypropylene, propylene oxide and acrylonitrile were the three fastest-growing downstream products, and the proportion of structure increased slightly. The proportion of acetone and acrylic acid was the same as that of 2017; the proportion of butanol was slightly lower.
World propylene prices hit a new high last year
In terms of production capacity, the world’s propylene production capacity experienced rapid expansion in 2014~2016 and a short-term slowdown in 2017, and accelerated again in 2018. In 2018, Asia’s propylene raw materials are abundant, and almost all production routes have new capacity, mainly from China, South Korea, India, Malaysia, Vietnam, etc., with the largest new scale in the world. The lightening process of ethylene raw materials in North America is accelerating, and the new capacity of propylene from cracking units is less. The Middle East is rich in light hydrocarbon resources, and the newly added capacity is mainly from the naphtha cracking unit, which accounts for more than 50% of the total capacity of the region. Western Europe is also dominated by cracked propylene, and catalytic cracking capacity is barely new.
In terms of consumption, the growth rate of propylene consumption in 2018 has increased compared with the previous two years, and new consumption is at a historically high level. Emerging economies are the main driver of growth in propylene consumption. Global propylene consumption is mainly used to produce polypropylene, propylene oxide, acrylonitrile, acrylic acid, butanol, isopropyl* and other products. From the perspective of the proportion of downstream product structure, polypropylene is a downstream derivative of propylene*, accounting for 65.7% of global propylene consumption in 2018, an increase of 0.7 percentage points over 2017, and the proportion of propylene oxide, acrylonitrile, acetone and acrylic acid. Both fell by 0.1%, and the proportion of butanol decreased by 0.2%.
The growth in polypropylene consumption is mainly driven by the rapid economic development of the Asia-Pacific region, which is dominated by China, and 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 is driven by plastic exports. The consumption of polypropylene in mature economies such as North America and Western Europe has steadily increased, but the growth rate is relatively slow. From the new consumption of polypropylene in 2018, it is 2.28 million tons in Northeast Asia, 520,000 tons in India and Pakistan, 330,000 tons in Southeast Asia and less than 200,000 tons in other countries.
Affected by crude oil prices, supply and downstream consumption, propylene hit a new high in four years in 2018.
In 2018, crude oil prices rose, supply in North America and Northeast Asia was tight, and global demand for polypropylene was strong, which contributed to the rise in propylene prices. In the United States, only a 750,000 tonne/year PDH propylene plant was put into operation, and propylene consumption growth was faster than supply growth, resulting in tight supply in North America. The new capacity in Northeast Asia is mainly in China, but most of the plants are put into operation at the end of the year. The output has not been released. In addition, the equipment maintenance in China’s Zhenhai Refining and Chemical, Fujian Refining and Chemical, and the downstream demand have increased the propylene gap.
China’s propylene source is more abundant
In 2018, China’s propylene production capacity was 34.83 million tons / year, and the output reached 31.4 million tons, up 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 the new capacity of China in the past year, the non-traditional route of propylene has increased significantly. PDH clearly ushered in the investment peak due to its cost advantage, and the device structure accounted for 18%. In recent years, China’s propylene sources are more abundant, and refinery catalytic cracking to produce propylene, naphtha cracking propylene, PDH, methanol to olefin (MTO), CTO and other routes have been put into production. In 2018, the new capacity of propylene is 1.8 million tons/year. Due to the large increase in methanol prices in the past two years, some methanol-to-propylene (MTP) devices are in long-term parking conditions, and the MTO devices in the east have to reduce the operating rate. The MTO projects such as Jilin Cornell have been delayed. There is no new MTO capacity in 2017~2018. From the proportion of device structure, the proportion of PDH and CTO increased to 18% and 14%, respectively, while the proportion of traditional refinery and naphtha routes decreased to about 57%. At the same time, although the growth rate of propylene equivalent consumption has slowed down year by year since 2015, about 7% of annual growth rate in 2018 is higher than GDP, which is in a period of rapid growth. The downstream demand for propylene is mainly polypropylene, and the demand for polypropylene for propylene is 67%, which is slightly higher than the global proportion by 1.3%. The commissioning of non-naphtha pipeline construction equipment such as coal chemical industry has greatly increased domestic polypropylene production capacity. In 2018, the net production capacity was 1.25 million tons/year to 24.73 million tons/year, and the output reached 22 million tons. Demand for prohibition of waste and catering take-out has boosted demand for polypropylene, with demand reaching 26.4 million tons in 2018, an annual increase of more than 8%. Pulled by downstream demand, propylene oxide, acrylonitrile, butanolConsumption also maintains a relatively high growth rate of more than 6%, which can be affected by environmental protection. The annual consumption of acetone and acrylic acid is slow, ranging from 2% to 5%.
It should be noted that the pricing power of propylene in Shandong is further enhanced. China’s East China propylene market refers to Sinopec’s monthly quotation, while Shandong propylene market has become the benchmark price for propylene trading in North China, Northwest China and Northeast China due to its large trading volume and frequent transactions. It is usually priced by Shandong propylene price plus freight. China’s imports of propylene are mainly from South Korea, Japan and Taiwan, and the import prices are dominated by these countries and regions.
Since the release of China’s crude oil import rights and crude oil import rights in 2015, the catalytic cracking capacity of Shandong refining has increased rapidly, and the propylene capacity has increased. 70%~80% of propylene in Shandong refining is sold to the outside world. With the increase in the operating rate of refining, the amount of propylene sold abroad continues to increase, which further enhances the pricing power of the Shandong market.
(provided by Shenyang Building Materials Network) <
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