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Insight | Time:Nov 17 2016 11:24AM
Coal-to PP producers switch production to ease pressure
 
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China PP production capacity expanded significantly in the latter half of 2016, as Shenhua Xinjiang and Zhongtian Hechuang both started up their integrated coal-chemical PP plants. Swelling up supply put a lot pressure on PP producers, even though market had been pulled in the third quarter, when upstream commodities prices rose significantly. Players were still seeing bearish futures for PP.

But although general capacities increase was irreversible, coal-to producers took measures to relieve huge supply pressure, as they diversified production from almost all homo PP raffia-grade to homo PP fiber, injection and co PP production. This change was prominent in Q3 2016, as listed in below table. Shandong Shenda, Shenhua Ningxia, ChinaCoal Shaanxi Yulin, Ningxia Baofeng and Pucheng Clean Energy had switched part of their production period to homo PP injection, fiber and co PP.

Coal-based PP producers Capacity (kta) Original production Current production
Shandong Shenda 200 homo PP raffia homo PP raffia, injection, co PP (switching)
Shaanxi Yanchang 600 co PP co PP
Shenhua Ningxia 10000 homo PP raffia (500kta) homo PP raffia (300kta)
Datang Duolun 500 homo PP raffia closed
ChinaCoal Shaanxi Yulin 300 homo PP raffia homo PP fiber, injection (switching)
Shenhua Baotou 300 homo PP raffia homo PP raffia
Ningxia Baofeng 300 homo PP raffia homo PP raffia, co PP (switching)
Pucheng Clean Energy 400 homo PP raffia homo PP raffia, injection (switching)
Shenhua Yulin 300 homo PP raffia homo PP raffia
ChinaCoal Mengda 300 homo PP raffia homo PP raffia
Shenhua Xinjiang 450 homo PP raffia homo PP raffia
Zhongtian Hechuang 350   homo PP raffia

The production switch does help reduce some burden in the commodity-grade homo PP raffia market, and if producers continue that, price trend for homo PP may not be as bearish as players have projected.
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