At the end of the year, the total production capacity of polyethylene will reach 31.21 million tons! The contradiction between supply and demand in the industry is becoming more and more obvious

In recent years, China's polyolefins have been in the concentrated expansion period
of production capacity.
Recently, Wanhua Chemical Group Co.
, Ltd.
held a general contracting union and design promotion meeting for the cracking furnace of ethylene plant of 1.
2 million tons/year ethylene and downstream high-end polyolefin project, which includes 250,000 tons/year LDPE plant with a total investment of 17.
6 billion yuan.

During the year, the international oil price continued to be high, and the profit of oil-based polyethylene products has been in the loss stage, but due to the generally long production and construction cycle of polyethylene equipment, with 3-5 years as a construction, in the previous years for the upstream supply side of domestic polyethylene products, under the opening policy of the capital side, the planning project is most, so under such a long construction cycle, polyolefin has been in the concentrated expansion period of production capacity in recent years
.

According to the statistics at the beginning of the year, the top ten polyethylene production capacity in China are shown in the following table:

As of the beginning of the fourth quarter of this year, counting Zhenhai Refining (600,000 tons), Zhejiang Petrochemical (700,000 tons) and Lianyungang Petrochemical (400,000 tons) that have been put into operation during the year, the total production capacity of domestic polyethylene plants has reached 29.
01 million tons, and it is expected that by the end of the year, two sets of units with a total production capacity of 1.
2 million tons/year and Sinopec Hainan Refining with a total capacity of 600,000 tons/year and Shandong Jinhai Chemical with a total capacity of 400,000 tons/year will be
put into operation.

Domestic petrochemical production plant in 2022 (put into operation/planned to be put into operation).

In 2022, the production capacity of domestic petrochemical plants will be proportioned by variety

The production capacity in 2022 is divided by variety, and the most productive type is HDPE, involving a production capacity of 2.
45 million tons/year, followed by full density, involving a production capacity of 1.
1 million tons/year, and finally LDPE, involving a production capacity of 400,000 tons/year; On the whole, the pressure during the year mainly comes from low-pressure varieties
.

If the above devices are put into operation as scheduled, it is expected that by the end of 2022, China's total polyethylene production capacity will reach 31.
21 million tons.

In the face of such a large-scale centralized production of the plant, and according to the practice of the new domestic petrochemical plant after the production of products, after the production of the new equipment of the production enterprise, because most of the initial products are in the trial production stage, most of its products will choose to produce the relatively primary and general products of this type of device, as a result, a large number of general material output will lead to serious homogenization of market products; And the quality and stability of new products need to have a period of market acceptance cycle, at this time the price of new products will be promoted in the market by selling the market at a low price, and the status quo of competing prices is becoming more and more obvious, forming a suppression
for the price of polyethylene products.

Comparison of domestic PE production capacity and apparent consumption growth rate from 2018 to 2022

From 2018 to 2022, in recent years, China's domestic apparent consumption of PE is still growing at a medium high speed of 4.
88%-11.
91%, but since 2021, the growth rate has declined to -2.
56%.

In the face of the expectation of such a huge device in the future, coupled with the current situation that the supply of foreign imported products is still sufficient, the growth rate of the demand side is still difficult to catch up with the growth rate of the supply side, and it is expected that the apparent consumption growth rate of China's PE in 2022 will be 0.
91%.

Under the current situation of extreme uncertainty in the current economic environment, the contradiction between supply and demand has surged, and the growth rate of downstream demand is limited, but under the interactive influence of the slowdown in consumption growth and environmental protection/plastic restriction orders and other policies in the future, the growth rate is expected to be relatively conservative, and the polyethylene industry may continue to maintain the status quo
of industry reshuffle.