What are the policies related to the polypropylene industry in 2021?
Looking back at the price trend during the year, the rise in the first half of the year came from the double resonance of the rise in crude oil and the extreme cold weather in the United States. In March, the first wave of rebounds was ushered in. The export window opened with the trend, and the domestic supply was in short supply. Pushed up, and the subsequent recovery of foreign installations suppressed the rise of polypropylene, and the performance in the second quarter was mediocre. In the second half of the year, the dual control of energy consumption and power rationing have become the driving force behind the rapid price increase. The cost of coal and methanol has been continuously pushed up.
We review policies related to the polypropylene industry during the year:
Policy 1: Carbon neutrality and carbon peaking.
In September 2020, China proposed to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060. Carbon peaking and carbon neutrality policies have pushed up the operating costs of companies in the energy and chemical industries, including rising electricity costs, rising raw material prices, and investment in environmental protection renovations and energy-saving and consumption-reducing facilities, pushing up the price of final products. At present, China's energy consumption is mainly dominated by high-emission coal. Under the dual-carbon strategy, structural transformation needs to be carried out on both the supply side and the consumer side. New materials and plastic circular economy are promising.
Policy 2: Dual Control of Energy Consumption.
On August 12, the National Development and Reform Commission issued the "Barometer of Completion of Energy Consumption Dual Control Targets in Various Regions in the First Half of 2021". The table shows that the reduction of energy consumption intensity in less than half of the provinces (autonomous regions) is progressing smoothly. On September 16, the National Development and Reform Commission issued the "Plan for Improving the Dual Control System of Energy Consumption Intensity and Total Volume", proposing to strictly formulate energy dual control indicators for each province. The energy consumption "dual control" policy is mainly aimed at industries with high energy consumption. Methanol, steel, electrolytic aluminum, ferroalloy, cement, coke, calcium carbide and other industries are included in the scope of control. The raw materials of polypropylene have been greatly pushed up, with methanol and coal having the largest increase, and production profits have fallen rapidly.
Policy 3: Inner Mongolia will no longer approve new coal chemical projects during the "14th Five-Year Plan" period.
The Inner Mongolia Development and Reform Commission issued the "Several Guarantee Measures for Ensuring the Completion of the "14th Five-Year Plan" Energy Consumption Dual Control Objectives (Draft for Comments)", pointing out that from 2021, coke (blue carbon), calcium carbide, polyvinyl chloride (PVC) will no longer be approved. ), synthetic ammonia (urea), methanol, ethylene glycol, caustic soda, soda ash, ferroalloys, electrolytic aluminum, sapphire, monocrystalline silicon and other new production capacity projects. During the "14th Five-Year Plan" period, no new modern coal chemical projects will be approved in principle.
Policy 4: Power and Production Restriction Order.
Since September 22, 2021, a number of listed companies have successively issued announcements stating that due to the shortage of power supply, in response to local requirements for "double control of energy consumption", the production lines of listed companies or their subsidiaries have temporarily stopped production. High-energy-consuming enterprises in Zhejiang, Jiangsu and parts of Yunnan have all stopped production. The surge in coal prices has led to a decrease in the growth of thermal power generation. Thermal power generation accounts for about 70% of the total power generation. The reduction in thermal power generation has the greatest impact on the overall power generation. The implementation of the policy of restricting coal mine production has led to a reduction in domestic coal supply, and the high coal price has led to Thermal power plants prefer to shut down their generating units. The affected areas of the polypropylene industry are in Guangdong, Jiangsu and Zhejiang, which are the main consumption areas of my country's product industry and the concentration of production enterprises. The implementation of the power curtailment policy affects the consumption progress of upstream and downstream raw materials, and the supply side and the demand side of polypropylene decrease at the same time.