Acrylic acid and ester related: summary and Prospect of propylene market in the first half of 2022

In the first half of 2022, the propylene market trend in Shandong was similar to that in 2021, with an approximate "m" shaped trend, and extreme prices appeared in January and March respectively.

The market shock strengthened in the first quarter. At the beginning of the year, the market resonated higher under the upward background of international crude oil and polypropylene futures, and the tight on-site supply and the downstream pre holiday stock further supported the market. However, after the restart of Bohai Chemical PDH unit, the supply and demand structure was improved, and the market focus fell back and reorganized. After the Spring Festival holiday, the downstream return to the market for replenishment of storage and the shutdown and maintenance of several refineries formed a positive support, but the terminal demand was not followed up enough, and the downward correction was made after the resumption of propylene supply. Subsequently, the energy supply shortage crisis caused by the conflict between Russia and Ukraine pushed the international crude oil upward breakthrough, and the cost side lifting effect was strong. The propylene market rose to the high point, but the downstream was weak in accepting high price raw materials, and the demand reduction prompted the trading range to fall. In mid March, the commissioning of Qixiang PDH unit, the sharp decline of international crude oil and the occurrence of epidemics in many places in China all released negative effects, and the decline of propylene market accelerated, but the impact of geographical situation continued, the international crude oil remained at a high range, and the propylene market was still at a high level under the support of cost.

In the second quarter, the market was first strong and then weak. In April, international crude oil continued to operate in the high range, and the cost of naphtha, propane and other raw materials remained high. Many domestic cracking units operated under reduced load, and many refineries entered the overhaul, which brought positive support. However, domestic parts continued to be managed and controlled by the epidemic, and the terminal demand was not followed up enough, which restricted the upward space of the propylene market. From May to June, with the restart of propylene units overhauled in the early stage and the continuous production of some new production capacity, the domestic propylene supply became more and more loose. Although the easing of the domestic epidemic situation brought a short boost, the downstream industry was in a relatively low season, the support on the demand side was limited, and the overall market operation was volatile downward.

In terms of the correlation between propylene and upstream and downstream industries, the correlation coefficient between propylene and crude oil / polypropylene powder decreased to varying degrees compared with the same period last year. The correlation between propylene and crude oil decreased from medium correlation to low correlation, and that between propylene and polypropylene powder decreased from very high correlation to high correlation. This reflects the trend that the market model continues to change to the buyer's market in the process of propylene capacity expansion.

From the perspective of the market in the second half of the year, the international crude oil on the cost side is expected to fall in shock, and we need to continue to pay attention to the development of the geographical situation. At the macro level, some overseas economies have high inflation pressure, which may restrict China's export trade. The domestic economy maintains the main line of steady growth, and the overall demand support is limited. In addition, the propylene industry chain as a whole is in the expansion cycle, and the contradiction between supply and demand is still possible to intensify. Under the strong support of the cost side, the operating space of the propylene market is narrowed. The editor believes that in the second half of the year, the propylene market is expected to fall after shock and strength, and pays attention to the follow-up performance of demand and the change of supply and demand pattern.