PO Prices Rising in China Dragging Polyol Along for the Ride
Will PO Prices in China Rise to CNY 12,000/tonne in March?
PUdaily | Updated: March 7, 2023
In February, multiple PO facilities in China experienced overhauls, technical transformation, or output reduction, including Jishen Chemical, Qixiang Tengda, Yida Chemical, Satellite Chemical, Sinopec Tianjin, Sinopec Zhenhai, etc., involving a total capacity of 1.69 mtpa. The capacity utilization was around 60% in February. Moreover, the synchronous maintenance of overseas facilities resulted in a significant shrinkage of imported goods. Therefore, the overall supply of PO in China was tight.
China’s February manufacturing PMI rose 6.9 percentage points month-over-month to 56.7%, indicating that China’s production activities are accelerating to pick up after getting rid of the impact of Covid-19 pandemic and the Spring Festival factor. Downstream manufacturers gradually recovered operation and saw sales increases in February. Besides, the costs of PO increased as the profit margin of chlorohydrin process further narrowed. As a result, PO prices in China kept moving up since February. On March 6, the prevailing offers of PO in Shandong and North China markets stood at CNY 11,100-11,200/tonne EXW in bulk in cash.
In a promising March, polyurethane downstream industries are pinned on new hopes. The market sentiment has grown markedly. Thanks to successively convened exhibitions and consumption-based incentives, the demand is expected to further rise. With the approach of China’s Two Sessions, many local governments have issued control measures for the production and transportation of hazardous chemicals, so that the supply of polyurethane raw materials will be more or less affected. PO prices in China are projected to move around CNY 12,000/tonne.
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