Sun Nan, CNCIC

1. The development status of polypropylene market

In recent years, China has invested heavily in polypropylene routes with non-traditional raw materials such as coal-to-olefins and propane dehydrogenation. At the same time, large-scale private refining and chemical projects have also been implemented, which has promoted a substantial increase in China’s polypropylene production capacity. In 2020, China's polypropylene capacity was 28.16 million t/a, the output 25.544 million tons, the apparent consumption 29.712 million tons, and the self-sufficiency rate at 86%. The overall supply and demand situation of China's polypropylene from 2016 to 2020 is shown in Table 1.

 Note: self-sufficiency = output/apparent consumption*100%

In the past three years, China has ushered in an explosive period of polypropylene production capacity. In 2018, two new polypropylene projects were put into operation, with a total capacity of 700 000 t/a; in 2019, 5 new polypropylene projects were put into operation, with a total capacity of 2.02 million t/a; in 2020, 9 new projects were put into production, with a total capacity of 4.15 million t/a. In addition, another 800 000 t/a capacities are expected to be put into operation in the next five years, as shown in Table 2. Under the current status of China's economic development, coupled with the influence of Covid-19 globally, competition in the domestic polypropylene market will become more intense. Therefore, new players need to conduct more detailed and precise research on product mix and marketing.

With the expansion of domestic capacity, the self-sufficiency rate of China's polypropylene products has been relatively stable, 86.4% in 2016 and 86.0% in 2020. In other words, in the past five years, China's polypropylene imports have accounted for a stable proportion of consumption, especially the mid-to-high-end polypropylene special materials, and the market has been under the control of leading foreign companies.

Given the above reasons, domestic polypropylene enterprises, especially the new ones, need to think deeply about the following two existing problems. First, China’s polypropylene industry has a structural oversupply problem, while some medium and high-end special materials still rely on imports. Second, China’s polypropylene industry also has a certain regional imbalance, as many coal chemical companies are located in the northwest region, where the polypropylene consumption is less, and the cargos need to be transported to eastern and southern China.

Based on the market research of CNCIC, the highly import-dependent high-end special polypropylene materials are high-end grades, such as high crystalline polypropylene, high rigidity polypropylene and high melt strength polypropylene products;and some special varieties, such as ultra-low ash polypropylene.

2. High crystalline polypropylenes (HCPP)

HCPP can be divided into two categories: copolymerization and homopolymerization. Copolymerization products are mainly used in downstream fields such as automobiles and home appliances, and homopolymerization products are mainly applied in the food packaging industry (Chart 1).

Chart 1 HCPP purchasing and using chain

In 2019, China's HCPP market consumption was about 500 000 tons. The automobile and packaging industries are the largest downstream users of HCPP, with consumption accounting for 70% of the total. The supplies are from home and abroad. Luoyang Petrochemical and Guangzhou Petrochemical are two typical domestic suppliers, focusing on homopolymer HCPP products with relatively low requirements. The market of copolymerized HCPP productsis occupied by SK Chemical, Borealis and Lyondell Basel, with Zhongsha Tianjin and Yanshan Petrochemical having a certain market shares in this segment.

The copolymerized HCPP market has 89% supplies coming from imports, and the proportion of domestic products was only 11%. The leading import supplier is SK Chemicals, taking 35% of the HCPP market in China, with typical grades such as BX3800, BX3900 and BX3920; Borouge ranks the second, with 24% market shares and the typical brand of BJ356AI; Lyondell Basel took the third, occupying 14% market shares, and the typical brands are EA5074, EA5075 and EP540V. Domestic suppliers are Sinopec Sabic Tianjin and Yanshan Petrochemical. South Korea is the largest source of copolymerized HCPP, and the main suppliers include SK, Lotte and Hanwha Total.

In the homopolymer HCPP market, domestic products have already occupied 96% shares, with Luoyang Petrochemical and Guangzhou Petrochemical accounting for nearly 50% of the market. In the left 4% imports, LyondellBasell and SK Chemical provided about 3%.

It is expected that the applications of HCPP will not change much in the future, still focusing on automobiles and packaging. It is expected that in 2030, the packaging field will further expand, while the automobile field will reduce its HCPP consumption due to the slowdown in the overall growth rate of this sector.

3. High strength polypropylenes (HSPP)

There are many HSPP suppliers in China, and the low- and medium-melt index products are tending to be surplus. In 2019, HSPP consumption in the Chinese market was 350 000 tons, mainly consumed by downstream automobiles, toys and home appliances (Chart 2). The largest user automobile took more than 50% of the total consumption; followed by toys, accounting for more than 30%. With the development of the automotive industry in the direction of lighter weight and higher performance, the application of HSPP in the automotive field will continue to grow in the future.

Chart 2 HSPP purchasing and using chain

China's HSPP self-sufficiency rate is relatively high, and domestic products have already occupied a major market share. Qilu Petrochemical, Formosa Ningbo and Yanshan Petrochemical have become major suppliers in the Chinese market, but more than 10% of HSPP products still rely on foreign suppliers such as Borouge, LyondellBasell and ExxonMobil. The distribution of HSPP suppliers is shown in Table 3.

4. Ultra-low ash polypropylenes

There are four major ultra-low ash polypropylene suppliers globally (Korea Petrochemical, Borealis, TPC and Sinopec Zhongyuan Petrochemical), and the downstream users are battery diaphragm and capacitor film (Chart 3). In 2019, the Chinese market consumed a total of 104 000 tons of ultra-low ash polypropylene.

Chart 3 Ultra-low ash polypropylene purchasing and using chain

At present, only Zhongyuan Petrochemical has successful development. Although other companies, such as Yuneng Chemical and Dushanzi Petrochemical, have also developed related ultra-low-ash polypropylene products, only Zhongyuan Petrochemical’s products have been recognized by the market and have gradually expanded market shares. Zhongyuan Petrochemical’s annual output is 5 000 tons, and the demand for the remaining 99 000 tons depends on imports, which are mainly from Korea Petrochemicals (KPIC), Borealis and Singapore TPC, with these three accounting for 99% of the total import volume.

In 2019, China's consumption of ultra-low ash polypropylene was 104 000 tons. The battery diaphragm industry was the biggest consumer, followed by the capacitor film industry. It is expected that the consumption will grow at a rate of 7.4% from 2020 to 2030. See Chart 4 for the demand forecast of various fields. 

Chart 4 China’s ultra-low ash polypropylene future demand forecast

5. High melt strength polypropylenes (HMSPP)

The Chinese market of HMSPP is mainly supplied by Shanghai Petrochemical, Singapore TPC and South Korea’s LG Chem. However, there is still a gap between domestic products and imported products in terms of quality and reputation. At present, domestic HMSPP products are mainly used in the production of foamed polypropylene. Due to the small EPP market and the weak bargaining power of EPP manufacturers, HMSPP products are in a state of small market scale withyet acceptable profitability.

Due to the small size of the market, there aren’t many grades available, and the producers usually focus on just one grade. 

Domestic HMSPP is mainly used for polypropylene foaming, followed by applications in hollow product injection molding and film fields.

6. Hugemarket for high-end polypropylene special materials 

The huge market space for high-end polypropylene special materials in China is of great significance to the transformation and upgrading of the polypropylene industry and the healthy development of related downstream industries.

With the influence of cargos from the Middle East and North America on the global trade pattern of polyolefin materials, and the successive commissioning of major domestic refining and chemical projects, the future competition in China's polypropylene market will become more intense. The general-purpose materials and low-end special materials will especially face a situation of domestic overcapacity, influx of low-cost products from overseas, and serious homogeneity competition.

With the overall industrial upgrading in China, especially in the fields of new energy and new infrastructure, the demand for high-end polyolefins is rising rapidly. However, some markets still rely heavily on imported supplies, which has a potential impact on the healthy development of the industrial chain.