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Enterprise sees China demand for durable plastics rebounding in H2 2023: exec


Demand key to maintaining wide polymer-grade, refinery-grade propylene spread

Second PDH unit on track for Q2 2023 startup

  • Author
  • Kristen Hays
  • Editor
  • Benjamin Morse
  • Commodity
  • Natural Gas Oil Petrochemicals

Propylene demand recovery in China in 2023 could improve downstream durable plastics demand, an Enterprise Products Partners executive said Feb. 1.

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Chris D'Anna, senior vice president of petrochemicals, said during the company's Q4 2022 earnings call that the spread between polymer-grade propylene and refinery-grade propylene prices tightened in 2022 but has widened in recent weeks largely because of supply availability more than demand.

"Ultimately, for that spread to remain wide, we need propylene derivative demand to be strong," he said.

The company's 750,000 mt/year propane dehydrogenation (PDH) unit at Mont Belvieu, Texas, was shut for about 44 days during Q4 2022 for planned and unplanned maintenance, which reduced propylene supply availability. The company's second 750,000 mt/year PDH under construction remains on track to start up in Q2 2023.

Propylene is a feedstock for polypropylene, which is heavily used in the automotive industry for durable plastics like dashboards and door panels in vehicles. Demand for durable plastics weakened in 2022 as rising interest rates and high inflation siphoned demand strength seen in late 2020 and throughout 2021.

D'Anna said Enterprise sees China's potential role in a global demand rebound emerging in the second half of 2023.

"We see that a little bit further out, maybe second half of the year," he said. "And a big part of that is during COVID, propylene goes into durables, and we saw that accelerate throughout COVID, the demand for those durables. We think it's probably second half of this year before we see that demand return."

Platts US spot polymer-grade propylene prices were last assessed Jan. 31 at 43.75 cents/lb, down 0.5 cents from Jan. 30, while refinery-grade propylene was assessed at 15.75 cents/lb. The US January PGP contract settled Jan. 30 at 43 cents/lb, up 11 cents/lb from December.

Platts is part of S&P Global Commodity Insights.