Average run rate at China's dehydro units rises to 79% in May

Singapore — China's propane dehydrogenation plants operated at an average rate of 79% in May, up from an average of 77% in April and lower than the 87% seen a year ago, S&P Global Platts calculations based on data from domestic information provider JLC showed June 11.

The slightly higher run rate in May was mainly attributed to two dehydro units raising run rates after maintenance, sources said.

Oriental Energy's Zhangjiagang Yangzijiang dehydro unit in eastern Jiangsu province raised its operating rate to 100% in May, from 70% in April, after restarting fully from a scheduled maintenance over early March-April 8, data showed.

The other unit was Tianjin Bohai's dehydro unit in northern China which raised its run rate to 40% in May, up from 20% in April, data said.

Tianjin Bohai restarted its unit from maintenance in May 7, but has been running at a relatively low rate as the unit was not stable, market sources said.

Tianjin Bohai's dehydro units have been on and off a few times in the past months due to unexpected technical issues, Platts reported earlier.

"Tianjin Bohai is expected to ramp up its operating rate in June," said a source in eastern China.

Meanwhile, Yantai Wanhua in eastern Shandong province had a lower run rate in May at 39%, from 46% in April, due to a scheduled turnaround starting May 14. The dehydro plant had shut over April 13-28 due to a technical glitch, and then advanced its scheduled maintenance that was to start in July to May, said second source in eastern China.

Yantai Wanhua restarted its 750,000 mt/year dehydro unit on June 10, Platts reported previously.

With the restart of Yantai Wanhua's dehydro unit and expectation of higher run rates at Tianjin Bohai, the average run rate at China's dehydro units is expected to rise further in June, market sources said.

The JLC monthly survey covered nine Chinese dehydro units, which have a combined propylene production capacity of 5.66 million mt/year, and can use up to 6.79 million mt/year of propane as feedstock at full capacity.

Processing margins edge down

Chinese dehydro units' theoretical processing margin was estimated at Yuan 1,398/mt ($197.10/mt) in May, down slightly from Yuan 1,423/mt in April, due mainly to higher import costs of term contract cargoes, Platts calculations showed.

Saudi Aramco set its May contract price for propane at $340/mt on an FOB basis, up $110/mt, or 48%, month on month.

Spot refrigerated propane cargoes on a delivered basis to East China averaged $307/mt in May, down slightly from $308/mt seen for April, Platts data showed.

Chinese dehydro units typically secure half of their propane requirements under term contracts and the rest from the spot market. As a result of the higher May CP, the average import cost for propane was estimated at around Yuan 2,860/mt in May after taxes and fees, up Yuan 393/mt, or 16%, from the previous month, the data showed.

On the other hand, domestic propylene prices also moved up a bit in May, which partially offset the rise in propane import costs.

Domestic propylene prices in East China, where most dehydro units are located, were estimated at around Yuan 6,333/mt, up Yuan 446/mt, or 7.6%, month on month, according to JLC data.

"China's propylene demand showed signs of improving since last month, but it's not expected to grow much amid a weak global economy," the second source in eastern China said.

RUN RATES AT CHINA'S PDH PLANTS

CHINA PDH PLANTS' TURNAROUND SCHEDULE

Sources: JLC & S&P Global Platts