Is the High PO Price Supported by Strong Demand?
2021-04-06    [Source:PUdaily]
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PUdaily,Shanghai --

Time flies! the Qingming Festival is already behind us. We have to go to work now!

After the Spring Festival holiday, the PO price rose, just as prices for other products did. But when prices for other products fell, the PO price still rose. 

Products

2021/2/10

2021/3/3

2021/3/26

Remarks

BDO

17600-18600

29800-30800

28900-30400

Prevailing quotes in East China DEL in bulk in payment by acceptance

PMDI

19,500-19,600

25,500-26,000

22,300-22,500

East China Market (goods from foreign manufacturers)

TDI

14,000-14,000

19,500-20,500

16,000-16,200

East China Market (goods from indigenous manufacturers)

PO

16,500-16,600

18,300-18,600

19,500-20,000

Shandong market (EXW in bulk)


  After stablizing for a short period of time before the Qingming Festival, the PO price dropped by RMB 500/ton during the festival. Is the price decrease due to the lack of solid foundation or merely a correction?

Price

Before the Festival (April 3)

After the Festival (April 6)

Change

Remarks

North China

18,000-18,100

17,500-17,600

-500

EXW in bulk in cash

East China

18,300-18,500

17,900-18,100

-400

DEL in bulk in cash

    To answer this question, we have to first answer the following questions. 

    Q1: Is the demand strong enough to support the soaring PO price? 

    No! 

    Before the festival, the PO price soared to RMB 20,000/ton, surpassing the high of RMB 19,000/ton hit in 2020. 

    Ostensibly, the soaring price is supported by strong demand. 

    But in fact, according to market sources, the demand is low and the high price is more a result of the manufacturers’ manipulation aimed at boosting the market. The price is so high that few buyers can accept it? It is heard that after the price increases buyers make purchase only to meet rigid demand. Some even suspend their purchasing, forcing the PO price to decline. 

    Q2: Is the high PO price a result of tight supply? 

    The answer is also "No". several months ago, the supply was indeed inadequate because the freezing in America impacted global supply of PO and polyurethanes. But currently, the plants have resumed normal operation and are even operating at full capacity. And PO imports from Thailand, South Korea and Saudi Arabia are reaching the port. 

    In addition, on March 25 the first batch of PO products from Sinochem Quanzhou Petrochemical’s 1000k t/a PO/SM unit were delivered to the customers. And CNOOC and Shell Petrochemicals Company’s Phase II PO/SM plant has been put into production. Its styrene monomer products are already being sold, whereas PO products have not been in circulation. All this suggests that the theory of tight supply has no basis. 

    Q3: Why can the PO price stay high with low demand? 

    Presently, the profit of PO stands at about RMB 7,000/ton. Although it has declined from RMB 8,000/ton in the previous two weeks, the profit is still much higher than that of polyether polyols.   With the start-up of new PO units, in the future the PO price will behave be as follows:

    -- The price will fluctuate around costs;

    -- The room for import arbitrage will become smaller; 

    -- The regional supply and demand are more balanced, and price gap between North China and South China narrows

Location

Company

Production process

Capacity

On-stream date

Tailing Chemical

Jiangsu San mu Group

HPPO

30

2021-2022

Hungarian, Jiangsu

Pyongyang Chemical

HPPO

40

2023 (construction starts at the end of 2021)

Hungarian, Jiangsu

Jiangsu Running New Material Technology

HPPO

40

2022

Hungarian, Jiangsu

Jiangsu Fujian New Material

HPPO

20

2021

Jinan, Jiangsu

Jiangsu Blue star Green New Material

HPPO

40

2021

Tailing Chemical

Tailing Aida Chemical

HPPO

15

2021

Guizhou, Guangdong

CNOOC and Shell Petrochemicals Company

PO/SM process

30

Already in operation

Guangzhou, Fujian

Fujian Guile Petrochemical

HPPO

20

2021

Lanzhou, Fujian

Pinochet Lanzhou Petrochemical

PO/SM process

30

Already in operation

Zhejiang, Guangzhou

BASF Guangdong Cummerbund Co., Ltd.

HPPO

40

2023

Fantail, Shandong

Anhui Chemical

PO/MTBE process

35

Q4, 2021

Zibo, Shandong

Xiang Teenaged Chemical

HPPO

30

2022

Zibo, Shandong

Shandong Enchanting Petrochemical Group

HPPO

30

2022

Zibo, Shandong

Shandong Xinjiang Chemical Technology Co., Ltd.

HPPO

15

2022

Haze, Shandong

CITIC Groan Chemical Company

PO/SM process

8

2021

Tianjin

Tianjin Bhai Chemical Industry

PO/SM process

20

2021

Tianjin

Tianjin No. 3 Petrochemical Plant

CHP process

15

2022

Tianjin

Tianjin Dag Chemical Industry Co.,Ltd.

HPPO

20

May or June, 2021

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