Domestic polypropylene market prices will fluctuate at a low level

PP fibers are mainly used in decoration, clothing, medical and health care and other fields.
With the implementation of the two-child policy and the intensification of China's population aging, especially the new crown pneumonia epidemic that has occurred since the beginning of the year, downstream wipes, diapers and masks have become hygienic.
The demand for protective equipment has surged, and there is a shortage of domestic fiber materials
.

PP pipe materials are mainly used in water supply, heating systems, etc.
, and have the advantages of light weight, convenient transportation, good environmental protection performance, and recyclability
.
With the advancement of urbanization and the northernization of heating methods in winter in the south, the growth rate of demand for pipe materials is on the rise
.

High-end products still need to be imported in large quantities

In 2019, China imported 3.
491 million tons of primary shape polypropylene (homopolymer PP), 1.
550 million tons of ethylene-propylene polymer (copolymerized PP), and 182,000 tons of other primary shape propylene copolymers, with a total import volume of 5.
223 million tons.
From the Asia Pacific and Middle East regions such as South Korea, Singapore, Taiwan, Thailand and Japan, as shown in Figure 4
.

In recent years, with the release of new polypropylene production capacity in China and the strengthening of local polypropylene production enterprises, the export volume has shown a rapid upward trend, reaching 406,000 tons in 2019, a year-on-year increase of 13.
8%.
shown in Figure 5
.
Actively opening up export channels will become an effective way to alleviate the contradiction between supply and demand in the domestic polypropylene industry in the future
.

From the perspective of import categories, the import volume of homopolymer PP still accounts for the largest proportion, and the overall trend is declining.
However, in recent years, the import volume of new materials has increased slightly due to China's ban on importing "foreign garbage" from abroad
.
The proportion of copolymerized PP is relatively small, but it is on the rise, and the average price is also higher than the average price of imported homopolymer PP and the overall average price of imported polypropylene, as shown in Figure 6
.

Due to insufficient research and development capabilities of high-end products in China and serious product homogeneity, some high-performance and special-performance products, such as metallocene PP, special BOPP film, and CPP film, still need to be imported in large quantities to meet the domestic market demand
.
The annual consumption of metallocene PP in China is about 100,000 tons.
Except for a small amount of supply from Yanshan Petrochemical, it basically relies on imports.
It is mainly used to produce high-transparency PP products for medical or food, food packaging films, non-woven fabrics, and ultra-fine denier polypropylene fibers.
and other fields
.
Annual import volume of special BOPP film, electrical film, capacitor film, aluminized film and other PP film materials with high stretching speed and width, ultra-thin, ultra-transparent and better low-temperature heat sealing performance, and PP injection plastic for automobiles and home appliances over one million tons
.
The annual import volume of PP pipe materials is about 500,000 tons
.
In the future, with the improvement of China's innovation capability and the commissioning of projects of foreign-funded enterprises, the output of high-end polypropylene products will also grow rapidly, and the degree of external dependence will decrease
.

China's polypropylene imports are mainly concentrated in the southeastern coastal areas, accounting for about 90% of the country's total imports.
Among them, Guangdong Province's PP imports have ranked first in the country for many years.
In 2019, the import volume was 1.
798 million tons, accounting for the country's total import volume.
34.
4% of total imports; Zhejiang Province ranked second, accounting for 23.
7% of total imports, as shown in Figure 7
.
This is mainly because most of China's PP processing enterprises and downstream users are concentrated in the southeast coastal areas
.
Among them, the demand for PP in East China accounts for 35.
6% of China's total demand, ranking first in the country; the second in South China, accounting for about 30%
.

Market prices will fluctuate

As the current naphtha cracking to propylene route is still the main source of polypropylene raw materials in the world, and also the main supply force of China's polypropylene market, the price of polypropylene products is closely related to naphtha, and further to crude oil prices, as shown in the figure 8 shown
.
Oil prices and supply and demand are the main factors affecting polypropylene prices
.

Overall, in 2019, the price of polypropylene in China will be under pressure
.
On the supply side, the huge new production capacity at home and abroad is expected to be put into production, resulting in continued pressure on the supply side; on the demand side, affected by the slowdown in economic growth, the downstream demand side increased less than expected, and both the supply and demand levels caused the price of polypropylene products to continue to fall
.

Since the beginning of 2020, the COVID-19 epidemic has spread to a wide range, and it has made the global economy worse.
The downstream demand support has been further weakened.
The cost side has been affected by the rapid decline in crude oil prices, and product prices have continued to fluctuate at low levels
.

High-end differentiation is the development direction

In recent years, China's polypropylene industry has done a lot of work in terms of capacity expansion and new product development.
The overall level has been significantly improved, and the product self-sufficiency rate has reached 83%
.
In the future, as new projects are put into operation, the sources of raw materials and market competitors will become more diversified, and production capacity and strength will increase rapidly.
It is estimated that by 2023, China's polypropylene production capacity will exceed 35 million tons per year
.
In terms of demand, with the increase of the consumption base and the slowdown of economic growth, the growth rate of polypropylene demand in China will show a downward trend
.
Therefore, in addition to irreplaceable high-end products, the market will gradually show a balance of supply and demand and even a surplus of local supply.
At that time, the market competition will become more intense, and product performance will be high-end, functionalized and differentiated, and product quality will be stabilized.
Sales methods The digitalization and diversification of export channels will be the development direction of the polypropylene industry
.