China's PDH plants raised their averaged capacity utilization rate to 77.93% in July, the highest rate to date in 2024, which was attributed to the improvement of PDH processing margins, as well as the production resumption of Jinneng Science & Technology's 900,000 t/y PDH plant, according to OilChem.
Source: OilChem
The domestic PDH processing margins recovered in the first half of 2024, with the losses narrowing from Yuan 600-800/t in January to Yuan 80-300/t in July. And if considering the added value of hydrogen, the processing margins will rebound to the positive. That is to say, most PDH plants still have marginal benefits, thus propelling an increase in the capacity utilization rates.
Source: OilChem
The average gross profits in East China averaged Yuan -275/t in the first half of 2024, up 4.51% compared with that in the second half of 2023, while that in Shandong was Yuan -339/t, down 44.87%. The prices of propane and propylene both seemed crucial to the PDH processing margins.
Source: OilChem
Separately, the imported propane prices stood at Yuan 4,936/t on average in the first half, up 1.69% year-on-year, primarily driven by stronger international spot LNG prices and rising chemicals demand amidst the expansion of domestic deep processing capacities, especially when the total PDH capacities exceeded 20.77 million tonnes in the first half.
At the same time, the propylene prices dropped slightly by 0.70% year-on-year to Yuan 6,903/t on average in the first half, supported by the supply cut during the spring maintenance season, as well as the significant increase in downstream PP exports. Data showed that China's PP exports are expected to have reached 1.25 million tonnes in the first half, soaring 86.64% year-on-year.
Looking ahead, with the upcoming of the winter heating season in the second half, the imported propane prices are expected to increase in line with higher international spot prices. Moreover, the PDH production capacity will continue to expand, with the new capacities expected to reach 2.31 million tonnes, which will definitely increase the propylene supply and thus weigh down the propylene prices. As a result, the price difference between propane and propylene is expected to narrow, and China's PDH plants will probably see their losses expand again.
Written by Sunny Fang, fss@oilchem.net
Edited by Aggie Hu, huchenying@mysteel.com