PDH-based PP capacity expansion to fall short of expectations

The PP industry sees intensive PDH-based capacity expansion plans in 2023, and the operation schedule of most projects is in H2 2023. With the capacity of 750,000 tonnes/year, only two projects came on stream by the end of August, both located in South China. The implementation of the proposed PDH-based PP projects might face growing uncertainties due to the low profits of PDH-based PP and the purchase difficulty caused by tight international propane supply.

Source: OilChem

With the capacity expansion plan of 7.1 million t/y, 3.1 million t/y capacities came on stream in the PP industry by the end of August, which did not reach half of the original plan.

PP Newly-added Capacity Plan in 2023 (Unit: '000 t/y)

Source: OilChem

Propane price changes greatly influence the production enthusiasm of producers, and there is a negative correlation between cost and profit in the production of PDH units. In addition, the falling production enthusiasm of PDH-based PP producers will bring rising expectations of unit maintenance in the future market.

Source: OilChem

The PP industry will see more PDH-based unit maintenance in September owing to high cost, mainly in East China and South China.

PDH-based PP Unit Maintenance Plan in Sept 2023 (Unit: '000 t/y)

Source: OilChem

Several PDH-based PP projects were originally planned to come on stream from September to December, but more investors might choose to stand on the sidelines as propane prices move up, because decision makers must consider the input-output ratio of their investment behaviors. Under the circumstance of low production profits and declining production loads, few investors will choose to go against the trend.

Written by Ariel Guo, gq@oilchem.net

Edited by Navy Liu, liuchuanjun@mysteel.com