New PP capacity start-ups in China delayed – but not by much

According to ChemOrbis Production News Pro, China is readying to add more than 8 million tons of PP capacity this year, 22% of which has already come online in Q1. However, the start-up of around 2.3 million tons/year of PP capacity– planned for April - has been delayed again, albeit not by much. That is to say, PP markets will brace a new round of massive additions, not right away but soon enough.

Five plants now scheduled to start up in late Q2

Start-ups of Dongguan Grand Resource’s two PP plants with a combined capacity of 600,000 tons/year and Donghua Energy’s 1.2 million tons/year of PP plant were delayed to May, while Anhui Tianda’s 300,000 tons/year of PP plant and Huating Mei Ye’s 200,000 tons/year of PP plant’s start-up date delayed to June 2023.

There are several likely causes for these delays, primarily related to demand and consumption dynamics in China.

Slower-than-expected demand recovery

One of the main reasons for the delayed start-up of PP capacity in China could be slower-than-expected demand recovery. The global economy, including China, has been facing challenges in the aftermath of the pandemic. Economic slowdowns have impacted the demand for PP, leading to reduced consumption in various end-use sectors. As a result, producers may have delayed their start-up plans to align with the expected recovery in demand. The delay in demand recovery could be attributed to factors such as reduced consumer spending, lower industrial production, and uncertainties in the global economic environment.

Inventory management

Another factor that could have contributed to the delayed start-up of PP capacity in China is inventory management. Producers typically maintain inventories to buffer against supply disruptions or fluctuations in demand. However, higher than anticipated inventory levels may push producers to delay the start-up of new capacity to avoid further building up inventory levels.

Almost 3 million tons of more PP capacity to come in H2 2023

The capacity start-ups delayed to May and June form 65% of the total planned new PP capacities in China for this year. Their imminent start-up seems inevitable soon enough.

What is more, China is set to add more than 2.8 million tons/year of new PP capacity in the second half of 2023, with a large portion of it expected to come online in December, according to ChemOrbis Production News Pro.

PetroChina Guangdong’s 200,000 tons/year of PP plant is expected to be started up in September 2023, while Zhejiang Yuanjin PC and Ningbo Kingfa are planning to add two PP plants with a combined capacity of 1.6 million tons/year in late 2023. Fujian Zhongjing’s 600,000 tons/year of PP plant and Qingdao Jinneng’s 450,000 tons/year of PP plant are also expected to come online in late December.