How does the feedstock cost gap between coal-based and oil-based PP routes reshape China's supply landscape?

How does the feedstock cost gap between coal-based and oil-based PP routes reshape China's supply landscape?
China's PP production is uniquely dual-track: roughly two-thirds from oil-based naphtha cracking, the rest from coal-to-olefins (CTO) and propane dehydrogenation (PDH). The cost spread is enormous. In mid-2026, with Hormuz tensions pushing WTI above $100, naphtha-based PP cash costs reached 8,000-10,000 yuan/tonne, while coal-based full costs stayed at 5,500-6,000 yuan. Baofeng Energy, with self-produced methanol at 1,200 yuan/tonne, earns around 5,600 yuan per tonne of PP, versus losses of about 479 yuan for merchant methanol-to-olefins operators. This cost advantage is driving capacity additions: over 20 million tonnes of new CTO and PDH capacity is planned between 2024 and 2029, further pressuring high-cost oil-based producers and accelerating industry consolidation.