Chinese PP demand outstrips domestic supply

According to a new report issued by AMI Consulting (Bristol, England), potential demand in the near future for polypropylene (PP) by Chinese processors is so high that domestic output will not be able to provide the needed resin, requiring further imports. Despite investment plans for more than 6 million tonnes of new capacity during the next four years, Chinese PP demand is seen by AMI analysts as outstripping domestic supply and forcing the country’s government to further allow unrestricted PP imports, mainly from the Middle East.

In 2005, China processed 8.4 million tonnes of PP and was the world’s leader for PP exports. It had record PP imports of just over 3 million tonnes. At this scale China is crucial to keeping global supply and demand in balance. AMI sees a possibility that exports from China, rather than falling, may actually reach 5 million tonnes by 2010.

For the last few years AMI says exports have been a massive driver of PP demand, but now it predicts that the Chinese growth rate for PP used in the domestic economy will accelerate on the back of fast growing consumer expenditure and demographic shifts toward urban living.

In 2005, 68% of Chinese PP was used for extrusion applications (accounting for 25% of that amount was woven flat yarn) as well as BOPP film and 32% for injection molding. In this last category, the country’s processors have been able to achieve the highest growth, notably in packaging, automotive parts, and appliance applications. PP processed products accounted for about 25% of the total Chinese market. Given government policies encouraging domestic consumption to reduce the economy’s dependence on exports, AMI expects local demand will be a more significant PP driver in the next four years.—[email protected]