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In 2020, China's PE equipment overhaul plan is still relatively small. Although domestic production companies took the initiative to reduce load due to the impact of the epidemic in February, with the commissioning of new equipment from Zhejiang Petrochemical and Hengli Petrochemical, China's PE production in February 2020 will still be slightly In May-July, China’s PE production enterprises were relatively concentrated in overhauls, and the year-on-year growth rate of PE production was relatively slow. After August, the expansion of new equipment such as Bora, Zhongke Zhanjiang, and Sinochem Quanzhou will be on the agenda. The year-on-year increase in output will expand rapidly.
With the further increase in production capacity, the supply pattern of China's PE market is also constantly changing. Large refining and chemical plants are mostly located along the coast. Their production capacity is large, production costs are low, and external transportation is relatively convenient. The commissioning of large refining and chemical plants has an impact on the market. With faster power and wider radiation, the changes in the supply pattern brought about by the era of new capacity expansion have had a more obvious impact on the traditional domestic supply market, and companies are more cautious in resource production and deployment.
Taking the PE supply of a petrochemical system in China in 2020 as an example, the overall pre-scheduled output of a petrochemical company in August increased slightly compared with July, an increase of 1.3%. According to the comparison of the supply of various areas of a petrochemical system from July to August 2020, the allocation of PE resources from a petrochemical system to the three major consumption areas of North China, East China and South China increased in August. From other regions, the Northwest area also There is an increase, but the supply in the northeast and southwest areas has decreased compared with the previous month. In February 2020, Hengli Petrochemical in Northeast China was the first to put into production. In August, Bora Petrochemical's capacity expansion was put on the agenda. The rapid growth of local production capacity in Northeast China is bound to have a certain impact on the original resource supply in the market.
In terms of varieties, in August 2020, HDPE resources of a petrochemical system in China increased by 3.5% month-on-month, of which resources allocated to Northwest, North and South China increased, while East China remained basically the same, while the Northeast and Southwest areas decreased. Consumption of pipes accounts for a relatively large proportion. At present, the local seasonal demand is slightly weaker. The overall import of HDPE resources in the market has decreased. In the northeast area, affected by the expansion of new equipment, the supply of local resources will continue to increase. The allocation of local HDPE resources has decreased.
In terms of LDPE, the LDPE resources of a petrochemical system in China increased by 2.34% month-on-month in August 2020. The allocation of resources to South China and North China increased, the allocation of resources in the Northwest and Southwest remained basically the same, while the Northeast and East China areas decreased. From the perspective of comprehensive allocation, although the allocation of LDPE resources in East China has decreased, its proportion is still high. The allocation of resources in South China in July was lower than normal. The allocation of resources increased in August, while the overall allocation of resources in Northeast China in July. Very high. In August, LDPE resources of a petrochemical system increased with the allocation to southern China, and the proportion of resources in Northeast China adjusted back.
In terms of LLDPE, as the largest variety of PE consumption, in August 2020, the LLDPE resources of a petrochemical system in China decreased by 3.14% month-on-month, and its resource allocation to North China and Northwest China increased. The amount of allocation in South China was basically the same month-on-month, while the other Northeast and North China And the southwest area has decreased. From the perspective of comprehensive distribution, the distribution of LLDPE resources in various regions fluctuates greatly. In August, a certain petrochemical system in China accounted for the largest resource distribution in North China, which was slightly higher than normal during the year, followed by East China, Northeast and Southwest. The proportion of resources in these three regions is basically the same, and although the allocation of LLDPE resources in the northwest area increased in August, due to the sufficient supply of local coal chemical companies, the proportion of LLDPE resources is relatively small.
On the whole, the new equipment of Bora Petrochemical in Northeast China will be put into operation in August. The capacity expansion equipment is designed to have 450,000 tons/year LLDPE capacity and 350,000 tons/year HDPE capacity. A Chinese petrochemical system's allocation of LLDPE and HDPE resources in Northeast China in August was also affected by the expansion of new equipment. The reduction of LDPE resources in Northeast China is a regular callback. With the further launch of large refining and chemical plants in the future, there will also be new changes in the resource allocation ratio of traditional Chinese enterprises.