China's Oct PDH plant run rates hit 13-month high at 91% amid strong margins.

Three PDH plants raise run rates in October

Fujian Meide expects to start up in November

October processing margins narrow slightly

Petrotahlil — China's propane dehydrogenation plants operated at an average of 91% of capacity in October, up from 86% in September and the highest rate in 13 months, S&P Global Platts calculations based on raw data from domestic information provider JLC showed Nov. 12.

No PDH plants were undergoing maintenance in October and profitable processing margins also encouraged plants keep rates high in the month, market sources said.

Zhejiang Satellite and Hebei Haiwei, which had both run at lower rates in September due to scheduled and unscheduled maintenance, raised their operating rates in October after completing the works. Zhejiang Satellite ran at full capacity in October, up from 78% in September, while Hebei Haiwei run at 94%, up from 75%, JLC data showed.

A third operator, Zhejiang Petrochemical, raised the operating rate of its newly launched 600,000 mt/year PDH unit to 70% in October from 61% in September.

For November, Fujiang Meide in southeast China is expected to start up its 660,000 mt/year PDH plant by the end of the month, and no maintenance was heard scheduled at existing PDH plants, according to JLC and market sources.

The monthly PDH plant run rate survey covers 11 PDH units in China with a combined propylene production capacity of 6.71 million mt/year, which can use up to 8.05 million mt/year of propane as feedstock at full capacity, according to Platts calculations.

MARGIN DIPS

Chinese PDH units' theoretical processing margin was estimated at Yuan 1,686/mt ($250/mt) in October, down slightly from Yuan 1,840/mt in September, according to Platts calculations.

PDH plants normally process propane feedstock bought a month earlier, which means the import cost of their October propane feedstock was based on September prices, market sources said.

In addition, Chinese PDH units typically secure half their propane requirements under term contracts and the rest from the spot market.

Platts estimates October import costs for term contract propane cargoes at Yuan 3,324/mt after adding taxes and fees, based on Saudi Aramco's September propane contract price of $365/mt, down 2.3% month on month due mainly to changes in currency conversion and freight rates.

October import costs for spot propane cargoes were estimated at Yuan 2,858/mt after adding taxes and fees based on the average of Platts CFR South China propane assessments in September, edging down 1.8% on month.

China's domestic propylene prices also edged lower in October, with the market level averaging Yuan 6,895/mt in eastern China, down 3.3% from September, Platts calculations based on JLC data showed.

Domestic supply of propylene will rise further as several new PDH plants start operations, with the additional supply expected to weigh on the processing margins of all PDH plants in the coming months, market sources said.

RUN RATES AT CHINA'S PDH PLANTS

CHINA PDH PLANTS' TURNAROUND SCHEDULE: