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Recently, the 1.2 million tons per year ethylene plant and the 800,000 tons per year full-density polyethylene plant as part of Guangdong Petrochemical’s integrated refining and chemical production project were completed. This makes it the third company this year to have a functional ethylene plant, following Zhenhai Refining & Chemical and Tianjin Bohua. According to projections, ethylene production capacity was set to increase by 13.35 million tons per year this year; yet halfway through the year, the actual capacity in operation is less than 20% of the planned level. Looking at the second half of the year, due to various constraints, it is likely thatethylene capacity expansion plans will not be fully realized. On the one hand, there is immense cost pressure. Since the end of February, international crude oil prices have remained above $110 per barrel, placing significant cost pressure on refining and chemical companies. Whether it is naphtha cracking or the Methanol to Olefins (MTO) process, profit margins have shrunk significantly, and both processes are operating at a loss. As an emerging process, light hydrocarbon cracking is highly favored by industry players due to its advantages such as low investment requirements and high yields. However, this process is constrained by the availability of raw materials; China relies heavily on imports for ethane, propane, and butane, meaning the profitability of this process largely depends on the availability of these raw materials. At present, the impact of global public health crises has not yet subsided, there are many uncertainties in economic trade, and coupled with rising shipping costs and high raw material prices, this manufacturing process has also experienced losses on certain occasions in history. Looking at the second half of the year, there is little possibility of a sharp drop in crude oil prices. The clouds hanging over the ethylene market remain, which adds to the pressure to bring new ethylene production capacity online. On the other hand, demand has failed to keep up. In 2022, the overall macroeconomic environment remained weak. As enforcement of plastic bans and restrictions intensified, biodegradable plastics stepped in to meet the demand in areas where they could replace polyethylene packaging. In addition, due to weakening export demand and reduced profits in downstream industries amid high oil prices, the apparent consumption of polyethylene in the first half of the year increased by only 1.13% compared to the same period in 2021, which is far below the growth rate of ethylene production capacity. Not only that, but the losses in the polyethylene industry are increasing steadily. In the second quarter, the loss per ton for polyethylene produced from oil was around 1,900 yuan; the loss per ton for polyethylene produced through naphtha cracking was between 1,200 and 1,500 yuan; and the loss per ton for polyethylene produced via ethane cracking was around 800 yuan. These losses have significantly reduced the enthusiasm of manufacturers to keep their plants operating. Furthermore, in the polyester industry, although the pandemic situation has eased in various regions, the recovery of end-market orders has been poor, and the operating capacity of polyester manufacturers is increasing very slowly. The demand for downstream monomers for ethylene oxide also performed poorly, with the operating capacity of enterprises producing polycarboxylate superplasticizers being less than 40%. Overall, faced with high upstream costs and weak demand at the end market, new entrants in the ethylene industry are more cautious about commissioning new plants. In addition, the impact of public health incidents has also, to some extent, delayed the commissioning of facilities under construction this year.