The global trade flows of polypropylene are quietly changing

Introduction: In recent years, regardless of the export opportunities brought by the cold wave in the United States in 21 years, or the overseas economic inflation this year, the global polypropylene production capacity has been growing due to the rapid decline in demand.  The global polypropylene production capacity grew at a CAGR of 7.23% from 2017 to 2021. By 2021, the global polypropylene production capacity reached 102.809 million tons, an increase of 8.59% compared with 2020 production capacity.  In 21, 3.34 million tons of capacity was added and expanded in China, and 1.515 million tons was added overseas.  In terms of production, global polypropylene production grew at a CAGR of 5.96% from 2017 to 2021. By 2021, global polypropylene production reached 84.835 million tons, an increase of 8.09% compared with 2020.

Global polypropylene consumption structure from the perspective of regional demand, in 2021, the main polypropylene consumption regions are still Northeast Asia, Western Europe and North America, consistent with the world’s three economic centers, accounting for about 77% of global polypropylene consumption, the proportion of the three are 46%, 11% and 10%, respectively.  Northeast Asia is the largest consumer market for polypropylene, with consumption reaching 39.02 million tons in 2021, accounting for 46 percent of the total global demand.  Northeast Asia is mostly a developing region with the fastest economic growth rate among the world’s three major economic centers, among which China plays an irreplaceable role.  China’s polypropylene production capacity continues to put into production, and the continuous increase in production has driven the demand in China and neighboring countries, and China’s import dependence has been greatly reduced.  Although China’s economic growth has slowed down in recent years, it is still the fastest growing country among the world’s major economies. The characteristics of polypropylene one-time consumption are closely related to the economy. Therefore, the demand growth in Northeast Asia still benefits from the rapid economic growth of China, and China is still the main consumer of polypropylene.

With continuous weaker overseas demand, the global supply and demand structure change, otherwise the goods are sold to southeast Asia and South Asia, South Korea, due to local demand weak buying intention is not high, and low price in our country, the resources of the Middle East originally sold to Europe, after Europe Mired in inflation, and low price in our country, low-cost resources has price advantage, domestic trade, the majority of flange, this round of low-cost resources,  Rapidly pull down the market price of domestic imported materials, leading to the transformation of domestic import and export, import window opened and export window closed.

Not only the domestic import and export situation has changed, but also the global polypropylene trade flow has changed significantly:

First, in the beginning of 21st year, under the influence of the cold wave in the United States, China changed from an importer to an exporter. Not only did the export volume increase significantly, but also the countries of export production and marketing expanded widely, rapidly occupying the market share of American exports to Mexico and South America.

Second, since the production of new devices in South Korea, the price of resources in South Korea has dropped significantly, which occupies the market share of China’s exports to Southeast Asia, leading to more and more transparent Southeast Asian market, fierce competition, and difficult transaction.

Third, under the influence of geopolitics in 2022, due to the impact of sanctions, Russia’s exports to Europe are blocked, and instead, they are sold to China, and the domestic Sibur resources have an increasing trend.

Fourth, the Middle East resources were previously sold more to Europe and Latin America and other places. Europe was Mired in inflation and the demand was weak. In order to ease the supply pressure, the Middle East resources were sold to China at low prices.

At this stage, the overseas situation is still complex and volatile. The inflation problem in Europe and the United States is unlikely to ease in the short term.  Is OPEC maintaining its production strategy?  Will the Fed keep raising rates in the second half of the year?  Whether the global trade flow of polypropylene will continue to change, we need to continue to pay attention to the domestic and overseas market dynamics of polypropylene.

Post time: Aug-29-2022