The Urethane Blog

Chinese PDH Update

Average run rate at China’s PDH plants rises to 85% in June from 81% in May

Highlights

Two plants raise run rates after maintenance

Two plants lower run rates on technical glitches

Processing margin at 8-month high

Singapore — China’s propane dehydrogenation plants operated at an average rate of 85% of capacity in June, up from a revised average rate of 81% in May and also from 81% a year earlier, S&P Global Platts calculations based on data from domestic information provider JLC showed July 10.

The higher run rate in June was attributed mainly to two PDH plants raising run rates after maintenance in the month, although two other PDH plants lowered run rates due to technical glitches, according to JLC data.

Tianjin Bohai’s PDH unit in northern China doubled its run rate to 80% in June from 40% in May, the data showed, after a period of unstable operations in May, sources said.

Yantai Wanhua in eastern Shandong province raised its run rate to 50% in June from 39% in May after restarting from scheduled maintenance June 10, the data showed. The plant was shut over May 14-June 10 for scheduled maintenance, S&P Global Platts reported earlier.

However, Shaoxing Sanyuan and Ningbo Haiyue in eastern Zhejiang provice both lowered their operating rates in June due to technical glitches. Shaoxing Sanyuan experienced glitches over June 18-22 that lowered its average operating rate to 67% in June from 80% in May, while Ningbo Haiyue experienced technical glitches over June 25-27 that lowered its run rate in the month to 90% from 100% in May, the JLC data showed.

Dongguan Juzhengyuan has had its PDH plant shut for maintenance since July 5 that was expected to take around six weeks, sources said.

The JLC monthly survey covered nine Chinese PDH units with a combined propylene production capacity of 5.66 million mt/year, which can use up to 6.79 million mt/year of propane as feedstock at full capacity.

PROCESSING MARGINS WIDEN

Chinese PDH units’ theoretical processing margin was estimated at Yuan 1,708/mt ($241.11/mt) in June, up from Yuan 1,398/mt in May, and the highest since October 2019, Platts calculations showed. Market sources attributed the improving margins in June to a rise in domestic propylene prices in the month.

Saudi Aramco set its June contract price for propane at $350/mt FOB, up $10/mt month on month. Spot refrigerated propane cargoes on a delivered basis to East China averaged $324/mt in June, up from $307/mt inr May, Platts data showed.

Chinese PDH units typically secure half of their propane requirements under term contracts and the rest from the spot market. The average import cost for propane was estimated at Yuan 2,901/mt in June after taxes and fees, up Yuan 39/mt or 1.4% from May, the data showed.

Domestic propylene prices in East China, where most of the country’s PDH units are located, were estimated at Yuan 6,689/mt in June, up Yuan 357/mt or 5.6% from May, according to JLC data.

Downstream polypropylene sales were stable through June, with the run rate at Chinese PP plants remaining healthy at 85%-88% of capacity, according to sources.

Strong global demand for packaging and medical applications, including masks and protective gowns, continues to provide support to China’s PP market, Platts has reported.

https://www.spglobal.com/platts/en/market-insights/podcasts/focus/070920-brouillette-whats-ahead-energy-markets