Zhejiang Petrochemical and Yulong Petrochemical PE plant restart delayed, 900,000 tons of production capacity restricted

The polyolefin weekly report released on August 31 pointed out that the restart of Zhejiang Petrochemical's 2# full-density polyethylene plant and Yulong Petrochemical's 2# low-pressure polyethylene plant have both been delayed, with a combined annual production capacity of 900,000 tons for the two plants. The two plants mainly produce linear low-density polyethylene and high-density polyethylene, and the delayed restart of the plants will disrupt the domestic spot supply of polyethylene.

Yulong Petrochemical: Upstream maintenance delays restart of downstream PE plant

Yulong Petrochemical's 450,000-ton/year 2# low-pressure polyethylene plant started scheduled maintenance on August 13, which was originally planned to resume production on August 23. On August 24, the market expected it to restart within a week, but subsequent news turned to a delay in resuming production, as of the end of August, the company has not announced a new start-up time.

According to Reuters news, as early as June, Yulong Petrochemical had shut down one crude oil processing unit and carried out maintenance on multiple petrochemical units simultaneously. The Yulong Island refining and chemical integration project has been put into operation for less than two years, with a long plant chain and highly coupled upstream and downstream materials. Crude oil processing, ethylene cracking and polyethylene production need to maintain material balance. The prolonged maintenance period of the upstream refinery directly restricts the resumption progress of the downstream polyethylene plant.

Zhejiang Petrochemical 2#: Continuous pressure on the raw material side, limited public information on resumption of production

The market refers to Zhejiang Petrochemical 2# plant, which is a 450,000-ton/year full-density polyethylene plant. The Zhoushan base of Zhejiang Petrochemical is equipped with large refineries and ethylene cracking units, and has been under pressure from raw material supply and refinery load adjustment throughout this year.

Reuters reported in March that affected by the geopolitical conflict in the Middle East and shipping disturbances in the Strait of Hormuz, Zhejiang Petrochemical carried out maintenance on a 200,000-barrel-per-day crude oil processing unit in advance, and the crude oil processing volume dropped by about 20% that month. 75%-80% of Zhejiang Petrochemical's crude oil is purchased from the Middle East, and Saudi crude oil supply accounts for about 60% of its designed processing capacity for a long time. Fluctuations in overseas crude oil supply directly affect the operation of refineries, which in turn is transmitted to downstream polyolefin plants. At present, there are few public details about the delayed resumption of production of this unit.

Calculation of production loss

The two plants have a combined annual production capacity of 900,000 tons, with a theoretical daily output of nearly 2,500 tons. If the two plants are delayed for one week simultaneously, the theoretical production loss will be about 17,000 tons. The actual supply reduction also depends on the operating load of the plant before shutdown, the product scheduling structure, and the ramp-up and production pace after resumption of production, so the actual impact is variable.

Against the backdrop of uncertain plant restart time, the expectation of contraction in domestic polyethylene supply has risen, and the actual start-up progress of the two plants needs to be continuously tracked subsequently.