[Plastic] Competition in the polypropylene market is becoming increasingly fierce

The new crown epidemic is raging around the world, the demand for masks has skyrocketed, and the short-term market chaos has led to a “roller coaster” in the price of polypropylene (PP) , which is the upstream raw material for masks.

Overall, in the next few years, affected by the release of new capacity and the slowdown of economic growth, my country’s PP market will gradually show a balance of supply and demand and even a local surplus.

Polypropylene has good electrical properties, high-frequency insulation, high strength, high rigidity and heat resistance.

The formation of a multi-agent interactive competition pattern

In 2019, my country’s PP production capacity and output were 27.

In the future, with the commissioning of new projects, polypropylene production capacity will continue to grow rapidly.

Current Situation and Forecast of my country's Polypropylene Supply

Demand growth is declining steadily

In my country's polypropylene products, wire drawing and injection molding account for a considerable proportion of 37% and 27% respectively.

PP (polypropylene) wire drawing material is mainly used for the outer packaging of woven products, cement, chemical industry, food, feed, construction materials and other fields.

PP injection plastic is mainly used in small household appliances, daily necessities, washing machines, toys, automobiles and turnover boxes.

PP film materials are mainly used for food packaging.

PP fiber is mainly used in decoration, clothing, medical and health and other fields.

PP pipe materials are mainly used in water supply and heating systems, etc.

High-end products still need a lot of imports

In 2019, my country imported 3.

In recent years, with the release of my country's new polypropylene production capacity and the strengthening of local polypropylene production enterprises, the export volume has shown a rapid upward trend, reaching 406,000 tons in 2019, an increase of 13.

From the perspective of import categories, the import volume of homopolymer PP still accounts for the largest proportion, and the overall trend is declining.

Due to my country's insufficient research and development capabilities for high-end products and serious product homogeneity, some high-performance and special-performance products, such as metallocene PP, special BOPP films, and CPP films, still need to be imported in large quantities to meet domestic market demand.

my country’s polypropylene imports are mainly concentrated in the southeast coastal areas, accounting for about 90% of the country’s total imports.

Market prices will fluctuate low

As the current naphtha cracking route to propylene is still the main source of global polypropylene raw materials and the main supply force of my country’s polypropylene market, the price of polypropylene products is closely related to naphtha and, further, the price of crude oil.
Oil price and supply and demand are the main factors affecting the price of polypropylene.

Overall, in 2019, my country's polypropylene prices will be under pressure.
At the supply level, the expectation of huge new production capacity at home and abroad has caused pressure on the supply side to continue to increase; at the demand side, due to the slowdown in economic growth, the downstream demand side growth is less than expected.
Both supply and demand levels have caused the price of polypropylene products to continue to fall.
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Since the beginning of 2020, the spread of the new crown pneumonia epidemic has spread widely, and it has made the global economy worse.
The downstream demand support has further weakened.
The cost side is affected by the rapid decline in crude oil prices, and product prices continue to fluctuate at low levels.

High-end differentiation is the development direction.
In recent years, my country's polypropylene industry has done a lot of work in 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, with the commissioning of new projects, the sources of raw materials and market competition will become more diversified, and production capacity and strength will increase rapidly.
It is estimated that my country's polypropylene production capacity will exceed 35 million tons per year by 2023.
On the demand side, with the increase in the consumption base and the slowdown in economic growth, the growth rate of my country's polypropylene demand will show a downward trend.
Therefore, in addition to the irreplaceable high-end products, the market will gradually show a balance of supply and demand and even local oversupply.
By then, market competition will become more intense, with high-end, functional and differentiated product performance, and constant product quality and sales methods.
Digitalization and diversification of export channels will be the development direction of the polypropylene industry.

(Keyword: Polypropylene)