LyondellBasell and Covestro's Joint Venture Propylene Oxide Plant May Close Prices Surge by 15%

Recently, Shell announced that its propylene oxide/styrene monomer (POSM) plant in Moorlaken, Netherlands has declared a force majeure due to technical issues, leading to production halts at the facility with an annual capacity of 210,000 tons. This disruption comes at a time when one of the world's largest propylene oxide plants, operated in partnership by LyondellBasell and Covestro, may also face closure, critically impacting the production of sustainable plastics and other essential products.

The propylene oxide industry was already grappling with tight supplies and rising costs. As a result, leading companies have increased product prices, with a recent jump of ¥200 per ton, bringing the total to ¥7,750 per ton. Experts predict a greater likelihood of further price hikes in the industry.

In a related incident, epichlorohydrin production faced an unexpected setback when Wubi Xinyue Chemical Group experienced a flash explosion and fire at its facility. The damaged equipment is expected to take about a month to repair, potentially halting production for over a month.

As a major player in the industry, Wubi Xinyue's accident has significantly impacted market sentiment. Many leading manufacturers, including Jiangxi Jinzhao, Ningbo Huanxing, and Shandong Minji Chemical, have paused their price quotes. Overall, the industry’s operating rate is around 50-60%, and the price for epichlorohydrin has surged by over ¥1,300, marking a 15% increase since the beginning of the year.

This tightening atmosphere is now affecting downstream sectors like epoxy resins and TGIC products, with liquid epoxy resin prices rising to ¥14,500 per ton and solid epoxy resins reaching ¥13,500 per ton. Mainstream TGIC prices have soared above ¥26,000 per ton, leading some companies to halt sales.

The polyester resin sector is also facing challenges, highlighted by a recent fire at Fenglin New Materials, a leading manufacturer in powder coatings, causing ripples across the industry.

In response to the crisis, numerous chemical companies have opted for cautious measures, choosing to reduce operating rates through maintenance rather than complete shutdowns. This cautious approach affects nearly 5 million tons of capacity across various products, including MIBK, BDO, and TDI. This situation is expected to tighten market supply further, increasing the anticipation of rising prices.