There seems to be a greater consensus and default in the industry to “in-roll polypropylene,” and the upgrade of polypropylene product mix is accelerating in secret. Propane is the source, and companies are no longer satisfied with homopolymer products.
While drawing, fiber, homopolymer injection molding and BOPP film are still the underlying structure of polypropylene products, there are more and more companies involved in impact copolymer, pipe, transparent, terpolymer and foam products. In addition to working on product structure, exports of polypropylene products have also ushered in a new era, with domestic polypropylene exports exceeding 1 million tons for the first time in 2021.
Currently, the domestic market has a high degree of external dependence on high-end polypropylene special materials, including two main categories. One is the high-end grades of bulk varieties, such as high crystallinity polypropylene (HCPP), high rigidity polypropylene (HSPP) and high melt strength polypropylene (HMSPP). Another category is special varieties of polypropylene products, such as ultra-low ash polypropylene products, metallocene polypropylene products, etc.
1. HCPP: copolymer products mainly rely on imports, and domestic products are mainly homopolymerized
High crystallinity polypropylene (HCPP) can be divided into two categories: copolymerization and homopolymerization. Among them, copolymer products are mainly used in downstream areas such as automobiles and household appliances, while homopolymer products are mainly used in the food packaging industry. In 2019, HCPP consumption in the Chinese market will be about 500,000 tons. The automotive and packaging industries are the largest downstream applications of HCPP, with consumption accounting for 70% of total consumption.
China initially has HCPP production capacity, but there is still a gap with imported products when it comes to applying it in automotive and other applications. Chinese copolymer HCPP mainly relies on imported supplies, with imports accounting for about 90% of the total volume. The main suppliers are SK, Borouge, LyondellBasell, Zhongsha Tianjin, Hanwha TOTAL, etc. Homopolymer HCPP is mainly domestic products, the main suppliers are Luoyang Petrochemical, Guangzhou Petrochemical, Lanzhou Petrochemical, Panjin Huajin, Zhenhai Refinery, etc.
Way two: expand exports
In 2021, China’s polypropylene exports of 1.3911 million tons, up 227.24% year-on-year, mainly to Southeast Asia. 1 quarter of 2022, affected by rising costs, foreign polypropylene prices rose more significantly, polypropylene export window opened, part of the monthly volume to do exports. 1, February exports have increased year-on-year, March exports, although less than the same period last year (2021 Although the export volume in March was not as high as the same month last year (global supply was tight due to the U.S. cold snap in 2021, and domestic exports briefly increased), it is expected to increase significantly from the previous year. Export volume is expected to be 249,500 tons in January-March 2022, down 7.93% YoY and 21.79% YoY.
Way three: product direction
Looking at the profit situation of different kinds of products, in recent years, the pipe material profits of hot water pipes remain better, mainly by the home improvement market demand pulling influence, profit margin of about 25%, some enterprises pipe material profits are higher. Secondly terpolymer polypropylene film product profits are better, represented by Yanshan Petrochemical, but the market demand is currently uncertain, product profits can be 20%-26%, do not exclude some enterprises product profits better.
In 2021, Shanghai SECCO, Maoming Petrochemical, Baofeng Energy, Donghua Energy and many other enterprises are actively developing and scheduling the production of transparent materials. The profit of transparent material is recognized by enterprises to be higher, and the product profit is close to 20%.
In addition, high melt impact resistant materials, high rigidity and high crystalline polypropylene, random copolymer injection plastics, thin wall injection plastics and thermoforming special materials can reach 15% or even higher profits.
In recent years, the high-end development of polypropylene direction, metallocene polypropylene, high melt strength polypropylene, waterproof membrane polypropylene special material, high rigid high crystalline polypropylene, “three high two low” polypropylene, etc..
Hot water pipes are always the most profitable products in the polypropylene industry, but the high end grades of hot water pipes are more profitable, but are limited by production technology. Domestic production of high-end polypropylene products is limited by technological breakthroughs. Technology has led to an imbalance between supply and demand, which has become a key factor affecting the profitability of polypropylene production.
For standardized products such as ordinary drawing materials and low-melt fiber materials, product profit is about 10-12%. High-melt fiber material has largely returned to normal in terms of row production in 2021.
In addition to technological breakthroughs, changes in market consumption also require extra attention. In recent years, the change and repetition of the epidemic has brought many changes to the market consumption behavior, and the sales team needs to maintain a sensitive control of consumer demand and active development of market channels.
Way 4: Bundling R&D and production with downstream customers
Sinopec, PetroChina, Wanhua Chemical and other well-known leading enterprises have basically formed the mode of working together with downstream customers to develop new polyolefin products. According to customers’ demands, they improve product index and increase the stability of product quality to increase customers’ stickiness and form effective profits.
Some private enterprises are trying to open up the whole industry chain model of upstream and downstream, for example, Zhongjing Petrochemical is building a whole industry chain model from propane, propylene, polypropylene and polypropylene film.
2、 HSPP: low and medium melt finger products are in surplus, melt finger greater than 30 products are completely dependent on imports
HSPP is defined mainly from the perspective of impact strength, which improves the toughness of the modified material and helps the modified material company to minimize the loading of the plastic body, thus simplifying the formulation.
In 2019, the Chinese market will consume about 350,000 tons of HSPP, which is mainly used in downstream sectors such as automotive, toys and household appliances. Among them, automobiles are the largest downstream consumption area, accounting for more than 50%. Toys are the second largest consumption area, accounting for more than 30%. The application of HSPP in the automotive sector in China will continue to grow in the future as the automotive industry’s requirements for materials move toward lighter weight and higher performance.
In China, there are many suppliers of HSPP products, and domestic products occupy the major market share. The supply of low and medium melt index products is in surplus, while HSPP products with melt index greater than 30 are still completely dependent on imported products. Qilu Petrochemical, Formosa Ningbo and Yanshan Petrochemical have become the main product suppliers in the Chinese market. More than 10% of HSPP products are still supplied by foreign manufacturers, such as Borouge, Lyondellbasell and Exxonmobil.
3、HMSPP: small market size but still profitable
There is still a gap between the quality and reputation of Chinese HMSPP domestic products and imported products. The Chinese market for HMSPP products is mainly provided by Shanghai Petrochemical, Singapore TPC and South Korea LG Chem.
The market demand for HMSPP is only about 52,000 tons, of which 95% of the consumption is for polypropylene foaming, but also for hollow product injection and film applications. Due to the small size of the downstream EPP market and the weak bargaining power of EPP manufacturers, HMSPP products are in a small market but with acceptable profitability.
4、Ultra-low-ash polypropylene: 95% of the Chinese market depends on imports
Global ultra-low ash polypropylene is mainly supplied by Korea Petrochemical, Scandinavian Chemical, TPC and Sinopec Zhongyuan Petrochemical, while Korea Petrochemical, Scandinavian Chemical and Singapore TPC supply more than 90% of the total global supply. In the Chinese market, 95% of ultra-low ash polypropylene is dependent on imports.
In 2019, a total of 104,000 tons of ultra-low ash polypropylene was consumed in the Chinese market. The battery diaphragm industry is the most widely used, followed by the capacitor film industry with a total consumption of 93%. Battery diaphragms and capacitor films are the main applications for low-ash polypropylene, so their average prices remain at the same level as the overall average price. Automotive, baby products and household appliance applications are high value-added segments, but the market is relatively closed, with small volumes and difficult market development. Consumption of ultra-low-ash polypropylene is estimated to grow at more than 7 percent over the next 10 years.
5. How to develop under polypropylene in-roll?
During the 2021 period, some polypropylene production in China has seen a phase of losses. This is the initial manifestation of the industry’s supply-demand imbalance and the inability to effectively transmit the rising cost of raw materials. The cost of polypropylene products, in addition to propylene monomer, catalysts, additives, and copolymer monomers cost differently leading to some differences in the cost of different types of polypropylene products.
Way one: large-scale
Upgrade scale has become the choice of many private enterprises. Donghua Energy deep layout Daxie and Maoming, Zhongjing Petrochemical 1.2 million tons / year copolymer polypropylene put into production within the year, Zhejiang Petrochemical polypropylene scale to 1.8 million tons / year. Baofeng Energy Ningdong base and Erdos base double point construction. Reducing comprehensive production costs through scale has become the first choice for many companies.
Way two: expand exports
In 2021, China’s polypropylene exports of 1.3911 million tons, up 227.24% year-on-year, mainly to Southeast Asia. 1 quarter of 2022, affected by rising costs, foreign polypropylene prices rose more significantly, polypropylene export window opened, part of the monthly volume to do exports. 1, February exports have increased year-on-year, March exports, although less than the same period last year (2021 Although the export volume in March was not as high as the same month last year (global supply was tight due to the U.S. cold snap in 2021, and domestic exports briefly increased), it is expected to increase significantly from the previous year. Export volume is expected to be 249,500 tons in January-March 2022, down 7.93% YoY and 21.79% YoY.
Way three: product direction
Looking at the profit situation of different kinds of products, in recent years, the pipe material profits of hot water pipes remain better, mainly by the home improvement market demand pulling influence, profit margin of about 25%, some enterprises pipe material profits are higher. Secondly terpolymer polypropylene film product profits are better, represented by Yanshan Petrochemical, but the market demand is currently uncertain, product profits can be 20%-26%, do not exclude some enterprises product profits better.
In 2021, Shanghai SECCO, Maoming Petrochemical, Baofeng Energy, Donghua Energy and many other enterprises are actively developing and scheduling the production of transparent materials. The profit of transparent material is recognized by enterprises to be higher, and the product profit is close to 20%.
In addition, high melt impact resistant materials, high rigidity and high crystalline polypropylene, random copolymer injection plastics, thin wall injection plastics and thermoforming special materials can reach 15% or even higher profits.
In recent years, the high-end development of polypropylene direction, metallocene polypropylene, high melt strength polypropylene, waterproof membrane polypropylene special material, high rigid high crystalline polypropylene, “three high two low” polypropylene, etc..
Hot water pipes are always the most profitable products in the polypropylene industry, but the high end grades of hot water pipes are more profitable, but are limited by production technology. Domestic production of high-end polypropylene products is limited by technological breakthroughs. Technology has led to an imbalance between supply and demand, which has become a key factor affecting the profitability of polypropylene production.
For standardized products such as ordinary drawing materials and low-melt fiber materials, product profit is about 10-12%. High-melt fiber material has largely returned to normal in terms of row production in 2021.
In addition to technological breakthroughs, changes in market consumption also require extra attention. In recent years, the change and repetition of the epidemic has brought many changes to the market consumption behavior, and the sales team needs to maintain a sensitive control of consumer demand and active development of market channels.
Way 4: Bundling R&D and production with downstream customers
Sinopec, PetroChina, Wanhua Chemical and other well-known leading enterprises have basically formed the mode of working together with downstream customers to develop new polyolefin products. According to customers’ demands, they improve product index and increase the stability of product quality to increase customers’ stickiness and form effective profits.
Some private enterprises are trying to open up the whole industry chain model of upstream and downstream, for example, Zhongjing Petrochemical is building a whole industry chain model from propane, propylene, polypropylene and polypropylene film.
JinDun Chemical is committed to the development and application of special acrylate monomers and special fine chemicals containing fluorine.JinDun Chemical has OEM processing plants in Jiangsu, Anhui and other places that have cooperated for decades, providing more solid backing for customized production services of special chemicals.JinDun Chemical insists on creating a team with dreams, making products with dignity, meticulous, rigorous, and go all out to be a trusted partner and friend of customers! Try to make new chemical materials bring a better future to the world.
Post time: Mar-13-2023