In September, propylene oxide, which caused a large-scale production reduction due to the European energy crisis, attracted the attention of the capital market. However, since October, the concern of propylene oxide has declined. Recently, the price has risen and fallen back, and corporate profits have declined significantly.
As of October 31, the mainstream price of propylene oxide in Shandong was 9000-9100 yuan/ton in cash, while the mainstream price of propylene oxide in East China was 9250-9450 yuan/ton in cash, the lowest since September.
Chen Xiaohan, an analyst in Longzhong Information Industry, told the Associated Press of Finance that due to the weak demand for terminal white goods and thermal insulation materials, the price of propylene oxide has no upward momentum; Although Europe has reduced production in a large area, China has no policy support such as tax rebate for propylene oxide, and has no price advantage. Therefore, the export of propylene oxide has not increased significantly since September, and the profits of propylene oxide enterprises have also been greatly compressed after the price drop.
At present, the downstream of propylene oxide is still weak, and the orders of “Golden Nine Silver Ten” in the traditional peak season are decreasing instead of increasing. Among them, the orders of polyether are cold, and it is difficult to purchase them in a centralized manner for a short time. Only moderate stock is available to prevent epidemic risk; The order of propylene glycol is limited, while the deal of dimethyl carbonate waiting for the new unit to be put into production is generally concluded; Stable finishing in alcohol ether industry; After the sponge and other end customers made a small amount of replenishment last week, their orders also decreased rapidly.
A person from a related enterprise told the Associated Press of Finance that the supply of propylene oxide products fell short of demand last year, mainly because the demand for terminal white goods surged due to the epidemic, but this demand cannot continue. The decline of propylene oxide orders since this year is relatively obvious. The downstream polyether industry is already in a state of overcapacity, so after the obvious decline of terminal demand, the demand for raw materials for polyether has dropped faster. However, the pressure on enterprises in the industry is even greater. Last year, due to the increasingly high profit of propylene oxide, many large chemical enterprises launched many new propylene oxide plants. Once the new capacity is put into operation, the new products will definitely bring a big impact on the price of propylene oxide in the short term.
The person told the Associated Press of Finance that the enterprises with new production capacity put into production in November include Qixiang Tengda (002408. SZ), CITIC Guoan (000839. SZ), Jincheng Petrochemical and Tianjin Petrochemical, and the total new production capacity has reached 850000 tons/year. Originally, some of these production capacities were started before November, but due to the depressed price of propylene oxide, it was postponed to November. However, according to the current situation, if all the new production capacities were put into production and supplied in November, the supply pressure on the whole industry would still be large.
Faced with this situation, many enterprises that are currently maintaining production have chosen to reduce production to ensure price because of the continuous compression of profits. As of last week, Jilin Shenhua and Hongbaoli (002165. SZ) have continued to stop, Shandong Huatai has successively stopped for maintenance, Shandong Jinling and Zhenhai Refining and Chemical Phase II plans to reduce the load, and the overall operating rate of propylene oxide has dropped to 73.11%, 12 percentage points lower than the normal operating rate of the industry in previous years of 85%.
Some insiders told the Associated Press of Finance that at the current price of about 9000 yuan, many new process propylene oxide enterprises have almost no profits, or even lost money in production. The traditional chlorohydrin method has a slight profit due to the reverse price of liquid chlorine, but the downstream is weak, and the supply of products exceeds the demand, making propylene oxide enterprises more embarrassed, especially those enterprises that added new environmental protection capacity last year. At present, when the product price is very close to the cost line, the propylene oxide enterprises have a certain willingness to support the price. However, due to the control of public health events in many places, the market demand is still difficult to support. If the pressure continues in the future, the propylene oxide may continue to reduce production to reduce the pressure. However, once the new production capacity is centralized, the price of propylene oxide may be greatly impacted.

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