Propoxy: 2020 Perfect End 2021 New Challenge

In 2020, a special year in which epidemic prevention and control is normalized, "historic" and "extraordinary" will become the key words in our common memory. It has been an extraordinary year for the world and for the market, and the domestic propylene oxide market has shown its extreme side in many ways.

1. Propane epoxide price: first suppress and then raise the ups and downs

As can be seen from the comparison in the figure, both the highs and lows are the heights never reached in recent years. The annual average price of PO is 11,928.77 yuan/ton. Compared with the mild and gentle price in 18/19, the overall price movement is obviously fluctuating. The subsequent imbalance between supply and demand also led to such extreme prices. The overall differentiation was large in the second half of the year, and the cycle rhythm of price fluctuation was completely disrupted. The controlling power of the upstream and downstream on propylene oxide was not obvious in the second half of this year, especially in the second half of this year.

Throughout the year, the influence factors is more, a new epidemic throughout the year, has not retreated, crude oil tumbled out of control, and southeast Asia are different extent influence on market events such as anti-dumping, ciprofloxacin, norm, "inflation dropped" as years new capacity are affected by the epidemic delay production over last year also flat, together with many import side maintenance, Supply basic did not increase, but the downstream part of the new, combined with the late outbreak recovery is better in our country, and exports rebound effect, the demand side in the second half of the increase obviously, and is affected by the environment is not optimistic this year, the downstream and terminal generally cautious operation is given priority to, but lead to the late show more passive, imbalance between supply and demand situation, Especially in the second half of the vast majority of the time are characterized by a seller's market, ciprofloxacin, factory price and low market years appear throughout the year at the beginning of the outbreak in early April 6400 yuan/ton, the highest point in the middle of October and December in late 18700 yuan/ton (shandong spot factory), the price is as high as 12300 yuan/ton, the rate of 192.19%. Both refresh recent records, showing extreme trends.

2. Profit: Serious differentiation and better overall performance

The price of PO rises and falls sharply this year, while the cost is relatively stable: the overall operating range of propylene price is not large, hovering around 7000 yuan/ton. In terms of liquid chlorine, the price in 2020 has got rid of the situation of inverted: According to Runfeng information monitoring, the annual average price of liquid chlorine in 784.19 yuan/ton, year-on-year increase of 154.23% (last year the average price in 308.46 yuan/ton). The price of the whole year is hovering around 1000 yuan. This year, the overall downstream demand is strong, which forms obvious support for liquid chlorine. The main demand is in PVC, propylene oxide and other industries, and even reached 2000 yuan/ton at one time, a new high in recent years.

Although the price of liquid chlorine has increased overall, compared with the price trend of PO soaring and plummeting, it is still relatively flat. According to the statistics of Runfeng Information, the overall profit in the first half of the year is low, with an average profit of only 789.39 yuan/ton, which is more than half lower than the average profit of 1622.48 yuan/ton in the first half of 2019. The low point of the year has also experienced a loss. However, with the subsequent good supply and demand, not only the price went all the way, but also the profit recovered significantly. Especially since August, it never rains but it has been a blockbuster. A rising tide of profit effectively made up for the loss of profit in the first half of the year, and the profit at the end of the year was close to ten thousand yuan. According to the statistics of Runfeng Information, in 2020, the annual average profit of propylene oxide in China is about 3169 yuan/ton, compared with 1458 yuan/ton last year, an increase of 117.35%. Although this year's profit performance is eye-opening, but with the change of supply and demand pattern in the future, the profit of propylene oxide in chlorol method is expected to gradually narrow.

3. On the supply side: there is still potential for a slight increase in stability

In terms of supply, in 2020, the total output of propylene oxide in China was about 2.915 million tons, with a slight increase of 0.87% compared with the same period last year. Earlier this year the overall construction affected by the disease differentiation is larger, the outbreak, depressed demand + transport limited, ciprofloxacin, loss, overall there are many negative valuation measures, starts just 55% in April, a new low in recent years, along with the late prices rebound in profits high, overall construction are the overall ascension, the entire second half most unit at high load operation. In addition to the overall negative reduction in the first half of the year, Jinpu Jinhu did not start the whole year, Wanhua and Huntsman underwent annual maintenance, and Jilin Shenhua 300,000 tons/year HPPO device restarted operation in the fourth quarter. Overall, the overall supply side has little change, basically the same as last year.

In terms of import, the performance of 20 years is almost the same as that of 19 years. According to the statistics of customs, the import volume of PO from January to November in 2020 reached 428,900 tons, which was only slightly increased by 1.43% compared with 422,200 tons in the first 11 months of 2019. The data of December has not been released by the customs, but it is estimated to be around 50,000 tons. Full-year imports are forecast at 480,000 tons, roughly flat from the same period last year. This year, some foreign devices (Saudi Arabia, Japan and South Korea, etc.) have been overseen, and wave band PO imports have been reduced, but the overall change is not big. Saudi Arabia, South Korea, the United States and Thailand source is still around 90% another imports, but this year, the specific proportion changes, although still ranked first in Saudi Arabia, but compare last year by 9%, mainly at the end of February Saudi sumitomo device maintenance, and affected by the epidemic, extended until June recovery, part in Saudi Arabia during the PO imports to 0; However, the proportion of the United States increased significantly, mainly due to the increase in the amount of goods transferred from the United States by Leander, while the proportion of Korea and Thailand was basically flat.

From the perspective of 2021, the Saudi Arabian device still has the routine maintenance plan in the second quarter, and the import volume is expected to decrease in the stage by then. However, Thailand PTT Company's 200,000 tons/year CHP device has completed stable operation in November 2020, and part of the goods have arrived in China in December. It is expected that in 2021, it will be able to import PO to China in a more stable manner. So stock increase expected import Thailand, South Korea unit 21 years with no maintenance plan, in addition, China as polyurethane domestic demand volume the powers in the asia-pacific region, other foreign PO supplier also in deepening PO delivery rate for China, imports for the whole year is expected to increase greater than shrank, embellish abundant information is expected in 2021, imports of domestic epoxy propane is close to 600000 tons.

According to the statistics of Runfeng Information, the apparent consumption of propylene oxide in China in 2020 will be about 3.39 million tons. However, according to the survey data of the sample enterprises of Runfeng Information, and considering the transfer of some social stocks under special circumstances this year, the actual annual demand for PO is as high as nearly 3.6 million tons. The main growth point is still from the polyethers industry. This also "achievements" in the second half of the year the arrival of the PO continued profiteers, in 2021, the comprehensive estimate of domestic PO apparent consumption can reach about 4.4 million tons, a year-on-year increase of 29.8%.

4. Polyether demand: export increase from weak to strong

2020 is not easy for polyether. Looking back on the whole year, the price of polyether took into account the historical high and low points, experienced from the delay of the resumption of work in the critical period of the epidemic to the gradual recovery of domestic and foreign demand, driving the boost of the whole chemical industry chain, so that every person in the industry can become a "witness" of this history. However, the market with high price shows a cautious attitude as a whole. New polyether devices are put into production, and the situation of excess production capacity of polyether continues in China. The new increase of raw material PO is concentrated in 2021, and the overall supply of raw material is tight.

It can also be clearly seen from the above figure that the price range of polyether in 2020 is greatly enlarged. According to the statistics of Runfeng, the average price of Shandong soft foam polyether market in 2020 is 12,480 yuan/ton, which is 20.6% higher than the average price of 10,345 yuan/ton in Shandong soft foam polyether market in 2019. Looking back at the crude oil slump in April, so that the whole chemical industry and polyurethane price center of gravity downward, market demand is depressed. The outbreak and spread of COVID-19 worldwide has brought a huge impact and destructive power to the global economy, and the market is highly panicked. In the first quarter, we witnessed an epic shock in the global financial market, with prices falling sharply, commodity exports being severely restricted, and the price of polyether falling continuously, which finally reached a record low of 6,800 yuan/ton. With domestic and overseas epidemics under control, the global economy is recovering and end demand is picking up, leading to an increase in export orders and the global flow of raw materials. In the third quarter, with the arrival of the maintenance season of the device, the supply of raw materials decreased, and the price of polyether kept rising with the raw materials, until the "Golden Nine" traditional peak season, the price of polyether broke through the historical high of 20,500 yuan/ton, and at the same time, it also renewed the largest price difference in history of 13,700 yuan/ton. In the fourth quarter, the domestic polyether market rose again in a row, although it did not reach the high point of the year, but it still ended with a high price of 18,950 yuan/ton before the festival.

According to the statistics of Runfeng Information, the total output of domestic PPG in 2020 is about 3.657 million tons, an increase of 8% compared with last year. On the one hand, new domestic devices have been put into production, and individual output has increased; On the other hand, affected by the peripheral epidemic, overseas demand drove the continuous increase of domestic polyether export, and the supply of imported polyether decreased slightly. China was self-sufficient, and the output of some brands increased. In 2020, the import volume of polyether is estimated to be about 590,000 tons, a year-on-year decrease of 2.7%; The export volume was about 820,000 tons, up 9.1% year on year. Especially in the fourth quarter, the maintenance time of foreign devices was long, the supply of imports was tight, and there was a gap overseas, so the export volume had a continuous growth trend. According to the statistics of Runfeng Information, in 2021, the new production capacity of domestic polyether will be 1.015 million tons, and the corresponding consumption of PO will be about 750,000 tons, which is still the main force driving the demand for PO. It is expected that the proportion of polyether consumption of PO will maintain a stable and rising trend in 2021.

5. DMC: keep stable and no increase in the future

In 2020, the total output of DMC/PG enterprises with raw materials for PO will be about 473,100 tons, and the consumption of PO will be about 325,000 tons. Compared with 2019, the overall utilization rate of DMC/PG industry in 2020 will be little changed. During the period of Dongying Shunxin, it will be in normal operation for some time, while some manufacturers will increase slightly. Consumption decreased compared with last year, the increase or decrease of all parties basically offset, and the overall consumption of PO changed little. In 2020, the existing part adopts DMC industry new technology of production units production PO method, effect is obvious to the market, and the future new capacity is no conventional PO ester exchange method, the DMC PO industry future consumption proportion is expected to steadily decline, in the whole PO downstream demand driving force still comes from polyether polyols and the derived industry.

6. 2021: New situation of supply concentration to meet new challenges

Overall in 2020, influenced by various elements, the domestic market of epoxy propane extraordinary performance, prices of big span, set high and low at the same time, the profit is polarized, soared to ten thousand yuan, near by the end of the overall performance are more extreme, although this year in the first half of the outbreak hit demand, under the influence of the PO all kinds of data over the last year has not dropped flat, Moreover, the profit performance is relatively good, indicating that the Chinese polyurethane market still has a strong market potential. The end of the year can basically be said to be a perfect ending, but in 2020 by the epidemic "dividend" the overall market has a historic scene, the long-term development of the later polyurethane industry research has no special reference significance.

In 2021, domestic epoxy propane to achieve higher rates of new capacity project as shown in the table above, according to the abundant information market tracking survey to learn, is expected to achieve rate during the first half of the larger sinochem quanzhou, Jin Ling huaian stage 1, taixing amounted to a saline and CSPC project, in the second half of the third quarter in tianjin dagu and citic guoan device is expected to be put into production, Yantai Wanhua Project is expected to be put into production in the fourth quarter, with a total of 1.32 million tons/year of new capacity. It is comprehensively estimated that the annual output of propylene oxide in China will reach about 3.8 million tons in 2021.

In addition to the new supply end, downstream polyether main factory is also to have certain increment but there is less than PO, is expected to gradually ease tight market equilibrium, and later with the new device on stream, gradually turned to loose the market difficult to appear again such extreme, follow-up is expected to return to the mainstream of near ten thousand yuan interval operation. In the long run, under the background of increasingly intensified horizontal and vertical market competition in the industry, the future upstream and downstream integrated supporting devices will be the core competitiveness of enterprise development, and the integrated industry chain development direction will have more market potential in terms of cost optimization and risk resistance ability.