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

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, however 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 to 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 stability. The prolonged maintenance period of the upstream refinery immediately restricts the resumption progress of the downstream polyethylene plant.

Zhejiang Petrochemical 2#: Continuous pressure on the raw material side, limited general 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 substantial 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 to about 60% of its designed processing capacity to a long time. Fluctuations in overseas crude oil supply immediately affect the operation of refineries, which in turn is transmitted to downstream polyolefin vegetation. At present, there are few general details about the delayed resumption of production of this unit.

Calculation of production loss

The two vegetation have a combined annual production capacity of 900,000 tons, with a theoretical daily output of nearly 2,500 tons. If the two vegetation are delayed to one week simultaneously, the theoretical production loss will be about 17,000 tons. The actual supply reduction also is determined by 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 vegetation needs to be continuously tracked subsequently.