Entering June, the production and operation pressure of the propane dehydrogenation to propylene (PDH) industry continued to ease, and the profit margin continued to expand. Since the second half of the year, it has turned from loss to profit. In the short term, the profitability of PDH will continue, but the basis for profitability is relatively fragile. The author believes that the current PDH market is intertwined with long and short, and there is still a lot of resistance for companies to maintain profitability.
The current PDH industry has two positive aspects. First, the cost pressure has been continuously reduced. Liquefied natural gas (LNG) is used as the upstream raw material of PDH, and its price continues to decline, which reduces the cost pressure of PDH. At present, the sales price of domestic imported LNG is below 4,000 yuan/ton, and there is still room for further decline in LNG prices in July. Benefiting from this, the profits of PDH devices improved, and profits began to turn from losses to profits in late June.
Second, the market price of propylene ushered in a rise. In the middle and late June, the PDH units of Yanchang and Xintai Petrochemical were temporarily shut down, and the methanol-to-olefins unit of Xingxing New Energy was shut down, resulting in a decline in the operating rate of the propylene industry. To a certain extent, it boosted the sentiment of the propylene market. In addition, the arbitrage space between downstream polypropylene (PP) and propylene monomer has opened up, and the load of outsourced PP enterprises and the propylene oxide industry has increased, and the overall demand for propylene has been acceptable, thus pushing up the market. In the short term, the inventories of most propylene enterprises are controllable, which may support the temporary stable operation of propylene prices.
However, while analyzing the good news, we should also see that PDH's profit margin continues to expand and there are still many obstacles. On the one hand, the industry boom continues to decline. In recent years, PDH projects have blossomed everywhere, and production capacity has expanded rapidly. Up to now, the new production capacity of the propylene industry is 3.65 million tons per year, and the annual production capacity is close to 60 million tons, an increase of 6.49% compared with the end of last year. The new production capacity is mainly based on PDH and light hydrocarbon cracking projects. However, the downstream consumption structure is relatively stable with little change, the demand has not kept up in time, and the contradiction between supply and demand is difficult to straighten out, which leads to the continuous decline of the prosperity of the PDH industry.
On the other hand, there are growth expectations on the supply side in the short term. Yanchang 600,000 tons/year PDH unit, Zhejiang Petrochemical 700,000 tons/year naphtha cracking unit, Guangxi Huayi 750,000 tons/year PDH unit, Zibo Xintai 300,000 tons/year PDH unit are expected to be produced in the near future Qualified propylene. Therefore, in the case of increasing supply in the propylene market, the market continues to rise insufficiently.
To sum up, the price of LNG fell more than expected in July, and the downward cost will have a great effect on improving the profit of PDH devices. However, without the cooperation of the propylene market, there will be no foundation for PDH to maintain profitability. As for whether the profit margin of PDH devices can continue to expand in the later stage, it depends on the game between the two. If the propylene market falls sharply in July, it will be more difficult for PDH devices to hold on to the victory. (Shi Xuan)
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