By Zhang Bei, CNCIC Consulting

PP is classified into homopolymerized PP and copolymerized PP. Copolymerized PP is in turn classified into random copolymerized PP and high impact copolymerized PP (also called block copolymerized PP). High impact copolymerized PP retains some rigidity and has higher impact resistance (especially low-temperature impact resistance), but its transparency and glow are lower.

Large production scale, diversified investment

   In new PP units, whether they are state-owned, private or foreign, the main investors have all selected large-scale and technology-oriented investment tactics and the capacity of most units is over 200 kt/a. Small PP units with a capacity of around 10 kt/a will be gradually phased out.
   In the past, most copolymerized PP units in China were operated by Sinopec and PetroChina. In recent years, huge market demand potentials have also attracted large private enterprises and coal chemical enterprises to build copolymerized PP units. Foreign companies such as Shell, BP, ExxonMobil and SABIC have constructed large refining/chemical-integrated plants in Guangdong, Shanghai, Fujian and Tianjin in collaboration with domestic enterprises. Matched copolymerized PP units have also been constructed in these projects. The total PP capacity of Sinopec and PetroChina accounted for 64.3% of the national total in 2010. The proportion declined to 47.8% in 2016, 16.5 percentage points lower. The participation of foreign multinationals and the involvement of private enterprises have pushed the main investment in the copolymerized PP sector of China to develop towards diversification.
   The route of raw material propylene is developing towards diversification. The traditional route of raw material propylene was byproduct in ethylene units and refineries. In recent years, however, the MTO process and the PDH process have already been employed in large-scale commercial production.

Large scale of new units

   The total capacity of units that can produce copolymerized PP was around 17 million t/a in 2017. Almost all new units can produce high impact copolymerized PP. Producers can switch between making homopolymerized PP and copolymerized PP. The capacity of units that actually produce high impact copolymerized PP accounts for 20-30% of the total copolymerized PP capacity. The output of high impact copolymerized PP was around 3.84 million tons in 2017.
   In 2017, there were around 50 enterprises that can produce copolymerized PP in China, the number having doubled since 2012. The copolymerized PP capacity of Sinopec and PetroChina accounts respectively for 30% and 17% of the national total. Enterprises with a considerable copolymerized PP capacity also include Oriental Energy Co., Ltd., Funde Energy Co., Ltd., Fuling Group Sanyuan Petrochemical Co., Ltd., China National Coal Group Corporation, Zhongtian Hechuang Energy Co., Ltd., Yanchang Coal Yulin Energy and Chemical Co., Ltd., Datang International Power Development Co., Ltd., Formosa Plastics (Ningbo) Co., Ltd. and Pucheng Clean Energy Co., Ltd.

Injection molding remains the application with the most rapid growth

   Owing to rapid output increase and considerable price reduction in recent years, the consumption of high impact copolymerized PP has grown rapidly. In the past five years, the average annual growth of the apparent consumption of high impact copolymerized PP in China was around 12.7%.
   The consumption of high impact copolymerized PP in China was around 5.00 million tons in 2017. The product is used mainly to produce injection molded products. A small part is used to produce pipes and sheets.
   Injection molded products made of high impact copolymerized PP are used mainly to make household electric appliances, automobiles and toys. Among household electric appliances, the manufacture of washing machines consumes the most copolymerized PP. In automobile manufacture, injection-grade copolymerized PP is extensively used in components, upholsteries and bumpers. As the poor brittleness performance of homopolymerized PP pipes at low temperatures has restricted their applications, in some application sectors they are gradually replaced by high impact copolymerized PP pipes and random copolymerized PP pipes. In cold water systems and floor heating systems, high impact copolymerized PP pipes are mainly used.
   With the constant improvement of China’s standard of living, the consumption of high impact copolymerized PP in making household electric appliances, household utensils, toys and packaging cartons will increase rapidly. Injection molding will still be one of sectors with the biggest growth potential. It is expected that the average annual growth of the consumption of high impact copolymerized PP in injection molded products will be around 6.5% in the next five years. The consumption of high impact copolymerized PP in injection molding is expected to be around 6.60 million tons in 2022.

Great quantities must still be imported

   Demand for copolymerized PP is growing fast in China. Despite rapidly increasing output, great quantities of PP still must be imported each year. China imports 1.20-1.30 million tons of high impact copolymerized PP annually. Imported products are mainly used in washing machines and automobile components. China exports very little copolymerized PP.
   With the completion of new plants, the output of copolymerized PP in China will likely increase drastically in the next five years, and the domestic demand will be better satisfied, step by step. The annual import volume of copolymerized PP will come down to around 1.00 million tons. There will be no big changes in the export volume.

Capacity will keep increasing

   At the end of 2017, there were 28 copolymerized PP projects that will definitely be constructed or have great possibility for construction. The total new capacity is 9.23 million t/a. The projects include oil-based PP units, coal-based PP units and PDH-based PP units. It is expected that 26 of them can be completed by 2021, increasing national capacity by 8.58 million t/a.
   The price of crude oil has been low since the end of 2015 and is still at level of US$55-60/barrel today. The oil-based polyolefin raw material route, therefore, has gained greater cost competitiveness and constrained investment in coal chemical projects. Some coal chemical projects that have not yet started construction are postponed or cancelled. Examples include coal chemical projects of State Power Investment Group, Total, Pingliang Huahong Huijin Coal Chemical Co., Ltd., Inner Mongolia Sladden Coal Chemical Co., Ltd. and China Coal Energy Yili Coal/Power/Chemical Co., Ltd. Some projects postponed during the Twelfth Five-Year Plan period have recently been restarted. Second-phase coal-to-olefin projects have also appeared. There is a considerable possibility for these projects to start production in next five years. So high impact copolymerized PP capacity will increase further.