[Plastic] Domestic polypropylene market prices will fluctuate at a low level

The global spread of the new crown epidemic , the surge in demand for masks, and the short-term chaos in the market have caused the price of upstream polypropylene to fluctuate sharply in a short period of time.

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

The formation of a multi-agent interactive competition pattern

At present, my country’s polypropylene market has formed central enterprises such as Sinopec, PetroChina and CNOOC, joint ventures such as Sinopec (Tianjin) Petrochemical, Sino-Korea (Wuhan) Petrochemical, CNOOC and Shell, private enterprises such as Hengli Petrochemical and Zhejiang Petrochemical, and coal chemical In the multi-subject interactive competition pattern of enterprises, propane dehydrogenation enterprises and imported products, Sinopec has the largest production capacity, accounting for 26% of my country’s total production capacity, followed by PetroChina, accounting for 18%.

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

Demand growth is declining steadily

Drawing and injection molding accounted for a considerable proportion of polypropylene products in my country, 37% and 27% respectively, film and sheet materials accounted for about 24%, fiber materials accounted for about 8%, and tube materials accounted for about 4%.

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 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 gradual decline.

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 the price of naphtha and, further, the price of crude oil, as shown in the figure.

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.
.

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 direction of development

In recent years, my country's polypropylene industry has done a lot of work in capacity expansion and new product development, and 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 Epidemic)