Dou Juan, China Chemical Fibers Association Polypropylene Branch

In 2021, China's polypropylene fiber industry gradually recovered amid the normalization of the COVID-19 pandemic, and the industry showed a relatively optimistic development trend in general. Specifically speaking, the released production capacity of upstream raw material ensured a stable supply of raw materials, export volume continued to grow as product quality continued to rise, the production of the industry had been steadily progressing, and the efficiency of the enterprise had been gradually improved. However, there are still some adverse factors increasing the risks of maintaining stable economic operation and adding downward pressure on the polypropylene fiber industry, including ongoing COVID-19 pandemic, increasingly complex and severe international situation, rising commodities price, insufficient shipping capacity, etc.

Operation of the polypropylene fiber industry in 2021

1. Main raw materials

Polypropylene production capacity

In recent years, the production capacity of polypropylene (PP), the raw material of polypropylene fiber, has been expanding. According to statistics, the total domestic polypropylene production capacity reached 32.86 million tons in 2021 and the annual output exceeded 29 million tons in total, a year-on-year increase of 14%, which was basically the same level as in 2020. The production capacity of polypropylene in China from 2016 to 2021 is shown in Table 1.

In 2021, the newly added capacity of polypropylene plants in China was 4.04 million tons. Among them, Heilongjiang Province Haiguo Longyou Petro-chemical Co., Ltd., Dongming Hengchang Chemicals Co., Ltd., Sino-Korea Petrochemical, Tianjin United Tire & Rubber International Co., Ltd.(TUTRIC), Hongji Petrochemical Co., Ltd., and Oriental Energy were successfully put into operation in the first half of the year, adding an effective production capacity of 2.29 million tons. It saw a slightly slowdown in the second half because of delayed projects. The adding capacity came from PetroChina Liaoyang Petrochemical Company, Fujian Gulei Petrochemical Co., Ltd., Jinneng Science and Technology Co., Ltd., Zhejiang Petroleum & Chemical Co., Ltd., Phase II, Line 3 and Gansu Huating Zhongxu Coal-chemical Co., Ltd. The other new production capacity originally planned to be launched in the fourth quarter was postponed to 2022. See Table 2 for the statistics of capacity expansion of polypropylene plants in China in 2021.

Polypropylene production processes include oil production, coal production, methanol production, propane dehydrogenation (PDH), outsourced methanol to propylene, and propane cracking to propylene. In 2021, the newly added production capacity of PDH-based polypropylene reached 1.45 million tons, accounting for 35.89% of the total new capacity, ranking the second largest growth process after oil-based polypropylene. See Table 3 for the statistics on the proportion of China's polypropylene production capacity by technical route in 2021.

2. Production situation

In 2021, the national output of chemical fiber reached 65.24 million tons, a year-on-year increase of 8.29%, of which the output of polypropylene fiber was 428 000 tons, a year-on-year increase of 3.83% (Table 4). Polypropylene fiber production enterprises were mainly concentrated in Jiangsu, Hubei, Zhejiang, Shandong, Guangdong, Fujian and other provinces. Representative enterprises included Guangdong Modern High-tech Fiber Co., Ltd. (Filament), Fujian Sanhong Renewable Resource Technology Co., Ltd. (Filament), Hubei Botao Synthetic Fiber Co., Ltd. (Staple fiber), Taizhou Hailun Chemical Fiber Co., Ltd. (Staple fiber) and others, each with a production capacity of 30 000 tons and above.

3. Import and export situation

According to data from General Administration of Customers P.R.China (Table 5), the import volume of polypropylene fiber in 2021 was 3 935.19 tons, a decrease of 4 455.06 tons compared with 2020, a year-on-year decrease of 53.1%. And the export volume in 2021 was 76 601.8 tons, an increase of 23 089.96 tons compared with 2020, a year-on-year increase of 43.15%. The main reason contributed to the recovery of overseas markets and the increased demand for COVID-19 pandemic prevention products. Polypropylene fiber was mainly imported from South Korea, and exported to Bangladesh, Thailand, Indonesia, Vietnam, and the United States.

The domestic polypropylene fiber market demand was stable. In 2021, the apparent demand in China was 355 300 tons, a slight decrease compared with 367 100 tons in 2020, basically the same level. With the gradual recovery of the global economy, the international trade of polypropylene fiber has become normal, and the increasing exports have effectively driven the continuous growth of domestic polypropylene production, providing a guarantee for the relatively stable development of the industry.

Prospects for the operation of the polypropylene fiber industry in 2022

From the perspective of raw materials, in 2022, China is expected to have 4.1 million tons newly added polypropylene production capacity. The domestic production capacity will exceed 37 million tons per year if all the plants can be put into operation on schedule. However, the growth rate of downstream demand for polypropylene may further slow down affected by dual carbon policy,  COVID-19 pandemic and other factors. The polypropylene price is greatly affected by the fluctuation of oil and coal prices, but the supply of the raw materials of polypropylene fiber is relatively sufficient. Enterprises need to pay attention to the price trend of polypropylene regularly, and use supply chain management to coordinate internal and external resources to ensure the relative stability of raw material prices.

From the perspective of the production scale of polypropylene fiber enterprises, most of them are small scale, and the proportion of enterprises with production capacity of over 10 000 tons accounts for less than 20%. In 2022, with the successive release of new production capacity of leading enterprises, the concentration of industrial production capacity will be further improved. Large enterprises above the 10 000 ton production capacity have strong risk management and control capabilities. It is expected that by the end of 2022, the total output of the polypropylene fiber industry will reach about 450 000 tons.

     From the perspective of demand side, polypropylene fiber products have potential consumer market in the non-woven field and the civilian outdoor field under the national "dual carbon" goal because of their outstanding features, such as less impacts on the environment, light weight, high strength, good acid and alkali resistance, good warmth retention, etc.