[PO] Power rationing: Can a short-term turnaround be a long-term boon?

Price trend of PROPYLENE oxide in China

Since mid-september, along with power brownouts policy actions to carry out, the more gradually introduced the corresponding limit, power failure measures, the industrial energy intensive and highly polluting enterprises to save more limited requirements, a certain influence on the chemical industry, the major market of epoxy propane producing XiaoQu shandong, east China are the power brownouts, at present there are still a part of the device is not restored, And the fourth-quarter restrictions are expected to continue.

Specifically, the loss caused by this power restriction policy to the propylene oxide market is shown in the table above: In 2021, the national output of propylene oxide is expected to reach 3.4 million tons. According to rough statistics, the negative reduction caused by this power restriction is about 20,000 tons (accounting for 0.6% of the annual output). Among them, Jiangsu province is the most affected, with a loss of 14,000 tons, followed by Shandong Province, with a loss of 6,000 tons. The remaining provinces are slightly affected, and the lower loss is not included for the time being.

In terms of price, there was an obvious N-shaped trend of "rising - falling - rising" during power rationing.

On September 13, before the power restriction, the mainstream cash ex-factory price of propylene oxide in Shandong was 16,300 CNY/ton. At that time, the market was in the late stage of stalemate game, and the follow-up of downstream orders was flat and the overall was weak. However, with the implementation of power restriction policy actions in various places, Jiangsu Province was the first to be affected among several major production areas of propylene oxide market: Nanjing Hongbaola plant stopped operation on September 16, and other devices in the site also had short-term negative reduction dynamics. In addition, some mainstream manufacturers were limited in shipping. In addition, upstream liquid chlorine had obvious negative reduction and raw material follow-up was limited. Together with double section approach, the market stock, the price as a whole up.

But at the end of September, with the continued fermentation of policies, downstream polyether, Propylene Glycol, alcohol ether, Flame Retardants and other industries were also affected, some production restrictions and parking, poor transmission to the terminal, policy uncertainty and partial closure of the National Day holiday cooled the market sentiment, and the price quickly fell to 16000 CNY/ton mark during the holiday. Holiday end, downstream customers wait-and-see, ciprofloxacin, market dips to inhale, combined with the holiday just need replenishment to follow up, the market has picked up again, and the shandong market, the recent wanhua device for low load operation, partial device brownouts influence declined slightly negative again, red polaroid still limited parking, supply side nervous to give a certain support, market short-term upward. As of October 14, shandong mainstream cash ex-factory price in 17500 CNY/ton. Compared with September 13, the price increased by 1200 CNY/ton, or 7.36%, and was affected by the unexpected shutdown of individual devices at the supply end on that day.

On the whole, the power restriction policy action brought a turning point for the weak situation of the ciC market in the early stage. Although both sides had dominant moments with the subsequent impact on the whole industry chain, both sides played a game with the double reduction of supply and demand, the positive supply side was still the main factor for the two recent price rises. In terms of regions, the upstream and downstream of East China are greatly affected by policies, and both supply and demand decrease obviously, and the atmosphere in the market is always weak. Shandong region presents a stable situation of supply and demand reduction, and most of the time rely on tight supply to rise, leading the national market.

After the release of the new policy, electricity power brownouts influence remained, also is expected to last until the end of follow-up double control pressure, ciprofloxacin, main ChanXiao District especially in jiangsu, electricity or will become the norm, the north market in heating season, or will also put some pressure, and part of the original repair 'dynamic, the entire fourth quarter is expected to yield is low, the ring c price to save a certain support, Specific attention should also be paid to the overhaul of all parties and whether the new devices of Wanhua (300,000 tons/year PO/SM device) and Dagu (200,000 tons/year PO/SM device) can be fulfilled as scheduled. The game of supply and demand is still the focus of the field.