Trends in the polypropylene market：
1) Global polypropylene production capacity will continue to grow steadily over the next three years and is expected to increase to around 88.9 million tons per year by 2020, with an average annual increase of more than 3 million tons per year. The new PP devices are mainly concentrated in Asia, the Middle East and North America, among which the new production capacity in the Middle East and North America is concentrated around 2020; It remains the world's main source of new capacity.
2) In the next three years, China's new production capacity of 7.4 million tons of polypropylene per year will account for more than 70 % of the global net increase. The investment bodies of new domestic installations have become more diversified, including traditional petrochemical companies, listed companies, private companies, and joint ventures. The raw material routes still maintain a diversified direction, including the naphtha route, MTO, and PDH. The traditional naphtha splitting route share will continue to decrease. The share of Sinopec and PetroChina's PP production capacity will continue to decline. China Shenhua and China Coal Energy will gradually become the main suppliers of polypropylene in China. At the same time, large-scale private refining companies and PDH factories will also become important domestic polypropylene suppliers.
3) China's self-sufficiency rate for polypropylene continues to rise in the next three years. It is expected that the domestic production capacity of polypropylene will exceed 100 % in 2020. However, there are still cases of structural oversupply and insufficient supply. Some high-end copolymerization PP, membrane PP and fiber materials will still be mainly imported products. Therefore, in the future, the competition of domestic polypropylene will be intensified. The performance is: the coal base PP competitiveness at the middle and low end is relatively strong. And continue to expand market ownership, the pricing mechanism of new entrants will form pressure on the existing market, petroleum-based PP is forced to continue to increase technology investment and product development efforts, and increase competition with imported products.
4) Short-term policies will have an impact on market demand and prices. Since 2017, the government has imposed a "ban on waste", which will significantly increase domestic polypropylene demand. According to the information approved by the FSC this year, imports of used plastics in China in 2018 will be reduced by 90 % from 5.83 million tons in the previous year, which provides strong support for the further strengthening of the consumption and price of polypropylene. And the impact of the policy on the market will continue for some time.
5) Sino-U.S. trade frictions may affect the import of propane raw materials from the United States, increase import costs, and to some extent affect the competitiveness of domestic PDH devices and the production process of new production capacity. It is estimated that if the import of propane is increased by 25 %, it will directly lead to an increase in PDH costs of 700 to 1,000 yuan/ton, which will, to some extent, reduce the impact on domestic traditional polypropylene enterprises and form a positive.
6) The development of the polypropylene downstream industry has changed rapidly and the demand for product upgrade is obvious. Driven by the rapid development of medical devices and automobiles, the continuous expansion of take-out and e-commerce, and the surge in demand after the release of the two-child policy, the downstream area of polypropylene shows obvious signs of upgrading of raw materials demand. Among them, high melt fiber, high rigid injection plastics, high melt copolymerization and high transparency products in the homogeneous polymer products are in increasing demand. The domestic also increased the development of technology and product development, constantly increasing new varieties to cope with and meet this downstream change.
