Recently, Wanhua Chemical issued an announcement on the suspension of production and maintenance of its subsidiary’s equipment, saying that according to the annual maintenance plan, the MDI unit (350,000 tons/year) and TDI unit (250,000 tons/year) of its subsidiary Hungarian Boside Chemical Company will be completed in 2022. Production has been suspended for maintenance since July 15, 2018, and the maintenance is expected to take about 35 days.
Many listed companies announced the suspension of production, and the chemical production capacity of more than 10 million tons was “zeroed out”
Although the announcement mentioned that this move will not have an impact on the company’s operations, the 35-day interruption of the production capacity of the “No. 1 Brother” 600,000-ton unit in the chemical industry still caused ripples in the chemical market. While chemical workers were making an emergency inventory to determine the inventory of raw materials, they were also thinking about whether they should follow the footsteps of “big brother” and stop and slow down at a time when orders have dropped sharply and costs have soared. In fact, many chemical companies have already done this, with frequent announcements of shutdowns and maintenance, and tens of thousands of tons of production capacity idle.
Tongde Chemical announced that in accordance with the spirit of the “Action Plan for Comprehensive Control of Air Pollution” and other documents issued by the local government, the company eliminated the hot blast furnaces used in the production of silica products and stopped the “10,000-ton silica product production line per year.” . In the first half of the year, due to the impact of the epidemic, restrictions on the movement of personnel and delays in materials used for construction, it is expected to be commissioned around the end of March 2023.
Bioa Chemical announced that it plans to suspend the first and second phase production lines of Songmudao Branch from July 1, 2022 and carry out automation upgrades on some production equipment. It is expected to resume production in late August. The subsequent supplementary announcement disclosed by the company clarified that the shutdown and upgrade is expected to take about 1.5 months, and is expected to reduce industrial fungicide production by approximately 3,000 tons.
Maohua Shihua: The 20,000 tons/year ethanolamine unit of Maoming Shihua Dongcheng Chemical Co., Ltd., a holding subsidiary of Maoming Shihua Chemical Co., Ltd., located in Maoming High-tech Industrial Development Zone, was unable to supply production raw materials to the unit due to a sudden fire at the upstream raw material supplier. Starting from June 9, the ethanolamine unit will be temporarily suspended. The resumption time of the ethanolamine unit depends on the start-up time of upstream raw material suppliers and government notifications. The specific time cannot be determined yet.
Yichang West Chemical Industry’s monoammonium parking lot;
Lingbao Jinyuan Morning Light Ammonium parking lot;
Shandong Weihai Hengbang Ammonium Parking Lot;
Hubei Chenao Technology Ammonium Parking Lot;
Hubei Yichang Zhongfu Chemical Monoammonium Parking Station;
Hubei Xingfa diammonium parking lot;
Hubei Liuguo diammonium parking lot;
Hubei Xiangyun diammonium parking lot;
Shaanxi Shaanxi Diammonium Chemical Parking;
Hunan Baling Petrochemical’s liquid ammonia plant is shut down;
Jiangsu Shilian Chemical’s liquid ammonia parking lot;
Sinochem Jilin Changshan liquid ammonia plant is shut down;
Jiangsu Heyou liquid ammonia plant is shut down;
Yanhua polycarbonate bisphenol A is shut down for maintenance;
Haiguolong Oil PE unit is shut down for maintenance;
Shandong Mingshui Dahua hydrogen peroxide parking lot;
Zhejiang Jiahua hydrogen peroxide shutdown for maintenance;
…
In addition, shutdown and maintenance plans for enterprises in many chemical fields such as methanol, ethylene glycol, and PP have been implemented in the near future, involving a production capacity of more than 10 million tons, and the industry’s operating rate is generally low.
In the caprolactam industry, due to the increasing production losses of enterprises, the gradual increase in equipment maintenance or production reductions by domestic manufacturers, and the tightening of market supply, the overall operating capacity of the industry has dropped to about 70%. At present, Yangmei has no quotation, the load is 70%; Shenma load is 70%; Sanning Orchid, the load is 80%, the orchid inventory is slightly more, Sanning does not have the goods, the main supplier is long-term cooperation, and maintenance is planned in the near future; parking in the middle of Dongming; Qinghua plan It will be parked in the middle of the year; Baling Petrochemical will be parked in the near future; Juhua is under maintenance; Tianchen Yaolong’s load has been increased to 60%; Nanjing Dongfang’s load has been increased to 80%.
In the PP industry, the number of equipment maintenance increased significantly in the first half of the year. Many companies have maintenance plans that run through July, or the restart time is yet to be determined. Among them, China Coal Yulin plans to start maintenance in early July for 10-15 days. The driving time in Northeast, East China, South China and other regions is currently to be determined.
In the urea industry, at the end of June and early July, some plants in Inner Mongolia Boda, Jiangsu Linggu, Jilin Changshan, China Coal Ordos, Shandong Ruixing, Hualu, Shanxi Fengxi and other plants reduced production or underwent maintenance, and domestic daily urea production declined. As of July 11, the daily production of urea industry was 156,000 tons., a decrease of 9,100 tons from the end of June. It is reported that there are still factories in Inner Mongolia scheduled for maintenance in the near future, and the daily production of urea is expected to continue to decrease. There are nearly 10 companies with maintenance plans in July. The maintenance time is spread over the early, middle and late afternoon, and many of them have maintenance cycles of more than half a month.
In the olefin industry, China Coal Shaanxi Yulin’s annual output of 600,000 tons of olefins and supporting 2 million tons of methanol units will be shut down for maintenance around July 4; Yangmei Hengtong’s current 300,000 tons/year MTO unit has reduced its load to 70%; Zhong’an United’s 700,000 tons /year MTO is expected to be overhauled at the end of July (the methanol unit will be shut down for 35 days and the methanol-to-olefins unit will be shut down for 45 days); Excelle’s 700,000-ton unit will be shut down for maintenance for 10-12 days starting from July 3; Yankuang Yulin’s 1.4 million-ton unit will be shut down for maintenance on July 3 The parking plan is scheduled for maintenance for 10 days on March 2nd. Nanjing Chengzhi’s 600,000 tons/year methanol unit is shut down for maintenance, and its first phase of 295,000 tons/year MTO unit is scheduled to be restarted for maintenance in August.
In the PTA industry, in addition to Honggang, Hailun and Ningbo Yisheng that are under inspection, Fuhai Chuang and Hengli Petrochemical plan to stop for maintenance in July. The current load of the PTA industry is 77.5%, still at a low level over the same period in the past five years.
In the polyester industry, the three major mainstream polyester factories reduced production by another 2.12 million tons in early July, and the specific implementation time for subsequent production cuts of 2.12 million tons has not yet been made public. It is expected that in July, the supply pressure of polyester filament will not decrease, the average monthly operating load may be around 73.5%, and the output may be around 3.1 million tons. Under the combined effect of production cuts and promotions, polyester filament factory inventories may first rise and then fall in July, and the end-of-month inventories are expected to be around 27 days.
Behind the shutdown for maintenance is production suspension and burden reduction, and “self-disciplined production reduction” has become the mainstream
According to incomplete statistics, dozens of chemical companies have started shutdowns for maintenance, and the affected production capacity has exceeded 10 million tons, which can be said to have caused a huge shock in the industry. Although chemical companies that stopped production and cut production said they would not have much impact, many companies made announcements at the same time, and the market situation was not as calm as everyone described. Shutting down for maintenance will bring about reduced output and load. Behind this is the crisis of continued decline in the operating rate of the chemical market.
Although the domestic epidemic has been basically controlled and various regions have basically resumed work and production since June, the “retaliatory” consumption that everyone expected has not appeared, some economic data are still declining, and market confidence needs to be restored. Faced with the current turbulent market environment, downstream electronics, manufacturing and other industries are very cautious in purchasing. Even though the current price trend of the chemical market is basically locked in a slight decline, it has still not improved the lukewarm situation of sharp decline in chemical plant orders.
Downstream sales are sluggish, with work and holidays suspended, midstream production and stocking lacking enthusiasm, and upstream struggling to see any improvement. Some people call this phenomenon of shutting down for maintenance and starting work with reduced load “self-disciplined production reduction,” which is another way of saying market-based overcapacity reduction. Once the market becomes cold and sluggish becomes the consensus in the industry, everyone will spontaneously reduce burdens and production to avoid risks. Compared with the mandatory measures under the epidemic, this kind of self-disciplined production suspension obviously has more initiative, and also reflects that more and more companies are beginning to face up to the cash flow losses caused by the continuous tightening of profits and the price reduction of chemical products. Negative feedback such as aggravation aggravates, and a “lay down” mentality begins to appear.
Today, the macroeconomic recovery is still relatively slow, and the overall atmosphere of the chemical market is relatively pessimistic. The situation of high inventory and low demand has frustrated many coating and chemical companies. Although many companies are still optimistic about the future, it is indeed difficult to predict when the expected substantial replenishment and shortage of supply will occur, and the idea of turning losses into profits is also difficult to implement. Overall, the short-term chemical market may remain low. It operates in shocks and will find a balance in the low profit state in the medium to long term.
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