China faces PP, PE supply overhang in Q1 amid planned start-ups
Another big wave of new PP, PE capacity to come online from Jan to Apr
Several PP and PE manufacturing plants –primarily located in coastal cities across eastern and southern provinces– are scheduled to come online during the course of the first quarter, following a slight delay from the initially scheduled year-end.
In the PP market, around 2.6 million tons of capacity was scheduled to come online in December and this has been delayed to the first quarter. The cumulative PP capacity expected to start up in the first quarter now totals more than 4.5 million tons/year, corresponding to nearly 40% of total PP capacity additions scheduled for the full 2023 in China.
As for PE, nearly 2.5 million tons/year of new capacity has been delayed to the first quarter of 2023. This corresponds to nearly half of the total capacity slated to come online this year.
You can visit ChemOrbis Production News Pro to see the monthly changes in new capacities as well as daily changes in offline capacities across the board on a country and product basis.
Local inventories fall but downside risks remain
Combined PE and PP inventories of China’s two major domestic producers were at 510,000 tons as of December 30. These levels were nearly 9% lower from a week earlier and also lower compared to last year’s same period. However, as Chinese demand is expected taper in the days heading to the Lunar New Year, the threat of supply glut from new start-ups continues to loom large for the first quarter of 2023.
Producers likely to continue cutting ops rates
Chinese producers have been running their plants at reduced rates almost since the second quarter of 2022 , aiming to balance local supplies with ebbing demand, and also to mitigate the pressure from higher production costs. Players largely expect PP and PE producers to continue to keep run rates low throughout the first quarter to help offset the impact of the approaching plant start-ups on prices.
Click to read the full expectations for the first quarter of this year in the PP market as well as in PE market.
To see how the uncertainties in new capacities will pan out and how they will reflect on PP and PE prices in detail in the upcoming months, you can check out ChemOrbis Price Forecast Reports, which are designed to cover everything you need to get an idea of the markets. Click the image below to request a sample.
More free plastics newsPlastic resin (PP, LDPE, LLDPE ,HDPE, PVC, GPS; HIPS, PET, ABS) prices, polymer market trends, and more...
- India’s import PP, PE markets rebound in Jan after several months of declines
- Tight supplies keep Asian PVC markets bullish
- Crude oil market sentiment turns in favour of bulls
- Will European PVC take a breather from 9-month downtrend in February?
- Supply limitations bolster Feb PP and PE outlook in Turkey
- China’s import PP markets climb to 6-month highs prior to Lunar New Year
- Weak activities press import PE, PP suppliers for discounts in Egypt
- Price erosion continues inside Middle Eastern polyolefins markets
- European PP, PE markets open 2023 with renewed drops
- Tight supply keeps expectations bullish in Turkey’s PVC market