Key Events in Propylene in 2015 (I)

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1. Jingbo built China’s first mixed alkane dehydrogenation plant. Jingbo Petrochemical Company constructed a new plant with an annual capacity of 250,000 tons for mixed alkane dehydrogenation, along with related facilities; the total investment in this project was 1,094,540,000 yuan. The plant is capable of producing 115,200 tons of propylene, 164,400 tons of MTBE, and 74,200 tons of n-butylene per year. This project adopts the world’s most advanced Oleflex mixed hydrogenation technology from the American company UOP. This technology boasts extensive design and engineering experience, and it represents the only set of commercially operational mixed alkane hydrogenation units in the world. With an annual production capacity of 250,000 tons of mixed alkane hydrogenated products, this facility is the first of its kind in China; the propylene produced here meets the purity requirements for epoxy applications. In 2015, some of the propylene production capacity continued to grow at a rapid pace. During the first half of 2015, domestic propylene production capacity kept increasing; the total capacity was estimated to be around 27 million tons. The increase in capacity during that period came from methanol-to-propylene projects – 1.27 million tons per year: 200,000 tons per year in Ruichang, 300,000 tons per year in Qicheng, 180,000 tons per year in Yangmei Hengtong, 200,000 tons per year in Longgang, and 390,000 tons per year in Xingxing Energy. Additionally, there was a 600,000 tons per year capacity increase from propane dehydrogenation projects carried out by Donghua Energy, as well as 120,000 tons per year from the mixed dehydrogenation process used by Jingbo. Among the facilities that came online in the second half of the year are Yantai Wanhua’s 750,000 tons per year propane dehydrogenation plant, and the Shenchi plant with a capacity of 200,000 tons per year for mixed hydrocarbon dehydrogenation, which is still in trial operation. 　　In the coming years, coal-based methanol-to-olefins projects such as Daze Chemical, Qinghai Salt Lake, China Coal Mengda, Shenhua Yulin, and Zhongtian Hechuang, as well as propane dehydrogenation projects like Hebei Haiwei, China Soft Pack, and Ningbo Fuki Petrochemical, will be put into operation one after another, which may lead to a risk of overcapacity in the propylene market. Explosion at the Hazardous Materials Warehouse 3812: At 22:50 on August 12, a fire broke out at the hazardous materials storage facility of Ruihai Logistics, which is part of the Tianjin Binhai New Area Port Group. At around 23:30, an explosion occurred at the scene. The explosive eruption and fireball triggered secondary explosions in several nearby enterprises, with strong tremors felt over several kilometers around. 　　Following that incident, the \"parade blue\" period began, and the entire chemical industry shifted to a mode of aggressive production cuts and shutdowns. However, the series of security measures triggered by this incident, along with the situation at Dongying Port where ships were unable to unload their cargo for a week, are particularly thought-provoking. The propylene market experienced a rare sharp decline, with prices dropping significantly. In September 2015, which is usually considered the peak period for this market, propylene prices plummeted to unexpected lows, continuing to fall and setting new record lows that were even lower than those seen during the economic crisis in 2008. The price of propylene dropped from over 10,000 yuan per ton to a record low of 3,750 yuan per ton within one year; the market for propylene, now at such an extremely low price, is causing concern. 　　International oil prices continue to fluctuate widely, with a long road ahead for any recovery, leaving market participants largely pessimistic about future trends. At the same time, there is a stalemate in both the supply and demand of propylene, with the market shifting from a seller’s market to a buyer’s market; downstream users now hold the upper hand. Although profits for these downstream users have improved, especially for PP powder and cyclopropane, buyers still seek cheaper raw materials, leading to an extremely pessimistic attitude as a result of this vicious cycle. 　　Overall, the supply and demand pressures in the propylene market are the root cause of its sharp decline; the market is currently focused on absorbing existing stock, and it does not yet have the conditions for a significant rebound. It is advisable for businesses to maintain a low level of inventory, for competitors and downstream partners to work together in a rational manner, so as to protect the interests of all parties involved and ensure long-term cooperation. 5. Dongying Port becomes Shandong’s largest port for Propylene imports. Unlike in previous years, port throughput in Shandong increased rapidly in 2015. Throughout 2014, Shandong ports imported a total of 231,745.4 tons. From January to October 2015, the total import volume through ports in Shandong Province was approximately 304,532.9 tons, which exceeded last year’s total of over 70,000 tons. As a major province for propylene consumption, Shandong brings together propylene resources from the Northeast, Northwest, North China, as well as those imported. The average weekly consumption of downstream products in this region is around 50,000–60,000 tons, making it a unique consumption area in the whole country.