Liu Xuefeng, Sinopec Tianjin

Some products go up and some down

China’s cracking C9 for industrial use averagely priced at RMB3 237/ton during January to June 2021, up nearly 14.58% compared with the same period last year. China’s hydrogenated C9 market, due to the high crude oil prices, climbed up by 5.10% YoY to RMB4 038/ton during January to June 2021. The C9 petroleum resin, at the same time, fell by 3.37% YoY to RMB4 875/ton on sluggish downstream demand. The refined dicyclopentadiene prices averaged at RMB6 497/ton, down 0.11% from the same period last year. The cracking C9 industry chain prices were decreasing in the first half of 2021, but the drop ranges of products were not large, having the general situation flat with last year. See Chart 1 for details.

Chart 1 China’s industrial-use cracking C9 chain products prices, H1 2021

Output of the whole industry chain increases

China's industrial cracking C9 production reached 1.1083 million tons in the first half of 2021, an increase of 34.21% over the same period last year, shown in Chart 2. The production in 2020 was low as many ethylene plants were put offline for maintenance due to Covid-19 broken out in early 2020. At the meantime, Panjin Baolai, Sinochem Quanzhou and Zhongke (Guangdong) all launched their new ethylene lines in H2 2021, and Wuhan Ethylene’s 200 000 t/a new line and Sinopec Sabic Tianjin’s 300 000 t/a new line both came on stream early 2021, coupled with the operation resumption of existing plants, the output and hence the market supply obviously increased. 

Chart 2 China’s industrial-use cracking C9 outputs, H1 2020 Vs. H1 2021

The growth of China’s hydrogenated C9 production was significant in the first half of 2021, partly contributed by the operation resumption of Shandong Shengji, which had shifted to hydrogenated C9. With the easing of the epidemic, Chinese people started to travel, which supported the consumption of the gasoline, thus driving the downstream demand for hydrogenated C9. In this context, the overall production went upward.

From January to June 2021, China's thermal polymerized C9 petroleum resin production was 146 500 tons, an increase of 29.42% over the same period last year. Such an increase was also because of the operation resumption in early 2021. Although some lines were shut for maintenance during the period, the outages were short, and the curtailment was small. Meanwhile, downstream demand through January to March was also good. 

The cold copolymerized petroleum resin production in the first half of 2021 was 72 200 tons, and C9 cold polymerized petroleum resin, among them, reached 24 700 tons, an increase of 64.67% YoY. C5/C9 copolymer petroleum resin output was 47 500 tons, an increase of 78.57% over the same period last year. Please see Chart 3 for China’s petroleum resin productions in the first half of 2020 and the first half of 2021.

Chart 3 China’s petroleum resin productions, H1 2020 Vs. H1 2021

Mid-year summary and market forecast

In the first half of 2021, China’s industrial-use cracking C9 supply increased due to the commissioning of several ethylene lines.

In the second half of 2021, Fujian Gulei Petrochemical and Zhejiang Petrochemical Phase II will also put their new ethylene plants into production, totaling 6 million t/a of capacities. Theoretically, domestic supply of industrial cracking C9 will expand. 

The supply of crude oil in the second half of the year would be somehow favorable to the market, and the trend of gasoline will still be relatively optimistic, hence pushing up the overall oil market. However, as hydrogenated C9 is less cost-effective than benzene, toluene and xylene, there will not be a significant increase in the actual consumption amount in the second half of the year.

As for C9 petroleum resin, there will be another 65 000 t/a thermal polymerized and 40 000 t/a copolymerized capacities launched. The huge growth in the short term will cause a temporary oversupply, leaving downstream in a wait-and-see mood. Meanwhile, downstream paintings and rubbers are weak and slow, and the exports are impacted by COVOD-19, giving little support to C9 petroleum resin. So, it is expected that C9 petroleum resin prices might hit a low in the second half of the year with very slim possibility of rebound. In terms of the refined dicyclopentadiene, the supply will increase while its downstream demand will be hard to pick up, leaving a chance for its prices to fall in the second half of 2021.