Jan. 22, 2019

China has been steadily adding new PP capacities for the large part of the last decade. If all goes according to plan, China’s new PP capacity additions will gear up considerably this year and in the next few years. 

More than 8 million tons/year of PP readying to come online

Totaling more than 8 million tons/year, the proposed capacities in 2019 reflect a substantial increase of eight times that of 2018. However, traders noted that the estimated expansions in 2019 may be subject to change amid various economic and political challenges.

Only two new plants started up in 2018

There were only two new PP start-ups confirmed last year, including CNOOC and Shell Petrochemicals Company Limited’s (CSPC) 400,000 tons/year unit that came on stream in April 2018. The other new capacity was Yanchang Yanan Energy’s 250,000 tons/year PP plant that started up in September last year.

Coal-to-olefin (CTO) process takes the lion’s share

Capacities with coal-to-olefin (CTO) process are poised to take the largest portion this year despite the Chinese government’s intensified campaign against pollution. Aside from CTO process, new plants will also be equipped with naphtha-cracking and PDH processes to produce more than 8 million tons/year of PP.

Two new plants to start ops in Q1

During the first quarter, Dalian Hengli is planning to put its 450,000 tons/year unit into operation. The commissioning in February is expected to be followed by the start-up of its other PP unit with 400,000 tons/year capacity in the final quarter.

Zhejiang Petrochemical will commission a total of 900,000 tons/year of PP capacity at its new integrated refining and petrochemical complex in Zhoushan, China.

China’s Jiutai Energy was also expected to start production at its new coal-based 350,000 tons/year PP unit in Inner Mongolia, China, by the upcoming Spring Festival, which falls in February. However, the start-up has been delayed to the third quarter of this year.

Commissioning activities to accelerate later in the year

The second quarter will see four new plants, with a combined capacity of more than 1.5 million tons/year. Zhongan Lianhe’s 350,000 tons/year unit, Qinghai Da Mei’s 400,000 tons/year unit, and Shenzhen Ju Zheng Yuan 600,000 tons/year unit are all expected to come on stream by May this year. Ningxia Baofeng’s 300,000 tons/year plant, meanwhile, is expected to start operations in June.

Final quarter to pack up 4.8 million tons/year in new capacity

Ten new plants, including Dalian Hengli’s phase 2 unit, are scheduled to come on stream by the final quarter of 2019. Announced capacities for the Chinese PP producers in the fourth quarter are as follows: Ningbo Fuji’s CTO based 800,000 tons/year unit, Da Qing Lian Yi’s 450,000 tons/year unit, Bao Lai Petrochemical’s 600,000 tons/year unit, Shaanxi Yulin Energy’s 300,000 tons/year unit, Tianjin Bohua’s PDH-based 600,000 tons/year unit, Donghua Energy’s naptha-based 600,000 tons/year unit, Zhong Ke Lian Hua’s 400,000 tons/year unit, Shenhua Ningmei’s CTO-based 350,000 tons/year unit, and Wei Xing Petrochemical’s 150,000 tons/year unit.

Buying appetite for import PP slowly shrinks since 2012

As a result of the growing capacities over the years, demand for imports has been dampened albeit not so considerably. After having imported around 4 million tons of homo PP in 2010, China gradually reduced its imports over the.years roughly by 25% to around 3 million tons in 2017-2018. 

Will capacity expansion forecasts prove accurate?

Considering that only a handful of new PP plants were put into production last year, the proposed capacities for this year suggest a marked advance. However, sources noted that China’s increasingly rigorous environmental inspections might slow the pace of coal-to-olefin projects. 

In addition, China’s slowing economic growth and the uncertainty caused by the trade war with the US may also delay or reduce the scope of the proposed projects.