China's Durable Plastics Demand Set to Make a Comeback in 2023

China: In a recent statement, an executive from Enterprise Products Partners suggested that demand for Propylene in China could be expected to improve by 2023, resulting in an increase of downstream durable plastic demand.

Chris D'Anna, Senior Vice President of Petrochemicals, recently reported during the company's Q4 2022 earnings call that the gap between prices of polymer-grade Propylene and refinery-grade Propylene had decreased in 2022 but has widened again in recent weeks. This is due to supply availability rather than demand.

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

The 750,000-metric-tonne per year propane dehydrogenation unit at Mont Belvieu, Texas had an unfortunate shutdown for 44 days during Q4 2022 due to planned and unplanned maintenance. This significantly reduced the available supply of Propylene. However, the company's second 750,000-metric-tonne per year PDH that is currently under construction is still on track to start up in Q2 2023.

Demand for durable plastics, such as those used in the automotive industry for dashboards and door panels, weakened in 2022 due to rising interest rates and high inflation. This comes after a surge of demand strength seen throughout 2021 that was driven heavily by Polypropylene - a feedstock derived from Propylene.

Enterprise CEO D'Anna has predicted a resurgence in global demand in the second half of 2023 and emphasized China's part to play in its realization.

"We see that a little bit further out, maybe second half of the year," he stated. "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."