In 2019, under the impression of a slowdown in domestic economic growth, environmental impact, and supply increment, the PO price in the first half of the year was at a low level during the year.
What is more unexpected is that the market price of propylene oxide has repeatedly refreshed in the first half of the year, in the second quarter, the factory profits reached a historical position, and some factories even hung upside down, so the second quarter became the centralized quarter of factory maintenance.

Supply

1. the average operating rate in the first half of 2019 was 87%, up 4.42% year on year; the output was 1.3958 million tons, up 5.74% year on year. It can be seen that the operating rate and output of the propylene oxide plant in 2019 were significantly better than last year, mainly due to the routine maintenance of the two sets of propylene oxide devices in Zhenhai and Wanhua in the first half of 2018 and the normal operation in 2019. The lowest operating rate in February was 82%, mainly due to the traditional Chinese Spring Festival holiday; the highest operating rate in March was 90%. after the Spring Festival holiday, the downstream demand recovered. the upstream factory started to gradually improve, and the maintenance factory was less.

2. in the first half of 2019, the import volume of propylene oxide reached 0.2164 million tons, up 51.75% year on year. Since South Korea's S-oil plant was put into operation in the second half of 2018 and most of its production capacity was put into East China, the import volume increased significantly. The import volume in January was the highest, reaching 52.1 thousand tons. in the group, due to the sudden increase in supply of goods from Saudi Arabia and Thailand; in February, the import volume was the lowest, only 24.6 thousand tons, mainly due to Saudi equipment maintenance and Thai goods returning to normal, leading to a sharp drop in imports.

Price

1. in the first half of the year, the average market price of ethylene oxide was 9766 CNY/ton, down 16.77% year on year. Although the output and import volume of propylene oxide increased significantly, the demand growth did not meet expectations, and the market price fluctuated downward under the guidance of unbalanced supply and demand. Driven by factors such as sluggish macroeconomic environment, the essence is good and lacking, the market support power is weak, the letter is low during the year, the multi-empty replacement is faster, and the difficulty coefficient of middlemen operation is increased.

2. in the first half of the year, the average profit was 1587 CNY/ton, down 48.82% year on year. Due to the fact that the price of liquid chlorine is mostly positive under the influence of environmental protection, and the increase in the maintenance of propylene in the second quarter has led to a high price, and the ethylene oxide has dropped rapidly in June, encountering an unprecedented blow, the minimum one-day profit dropped to 200 CNY/ton, and some small factory profits appeared upside down.

Raw Materials

In the second half of the year, under the influence of environmental protection policies, the starting load is no longer high, and the downstream product peak season in the second half of the year, the price is high or will continue. The OPEC production reduction agreement in the second half of the year is expected to be extended, and the price of crude oil may remain at a high level during the year. Therefore, under the support of cost, it is difficult to have a significant return. Expected second half epoxy propane cost high support or will continue.

Demand

Under the environment of a slowdown in global economic growth, the epoxy propylene market is difficult to be independent. the domestic automobile industry, the real estate industry, have failed to give good demand support for epoxy propylene, and terminal sponge exports to the United States have increased tariffs, it has caused a big blow to some export sponge enterprises. Focus on whether the G20 summit in Japan can bring good results. otherwise, although 9-10 months are the peak season of the downstream Polyether market, I am afraid I will forget that it is difficult to achieve the expected demand in the case of overall demand reduction under the demand overdraft.

Overall, the price and profit of propylene oxide in the second half of the year will recover from the first half of the year under the support of cost support and demand growth, but there are still many uncertain factors, the market price and profit recovery of propylene oxide are limited.

Disclaimer: ECHEMI reserves the right of final explanation and revision for all the information.