Polypropylene shifts to regional focus in long-term forecast

Global demand for polypropylene is forecasted to increase nearly 50pc from 2022 to 2032. This vast growth will impact trade dynamics as polypropylene becomes a more regionally focused commodity than seen historically. Northeast Asia demand will consume more than 50% of this growth, focused in areas like the automotive sector including electric vehicles, which utilize nearly 30pc more polypropylene versus internal combustion engines. South Asia’s growth will contain the largest percentage growth with 92pc over the next 10 years. Several regions including North America, Western Europe, the Middle East, and Latin America and Caribbean are forecasted to grow at one to two percent. While several regions are expected to increase production, there is no significant cost advantages for any region as all feedstocks are tied to naphtha economics. With no clear competitive and economical advantage, polypropylene will start to become balanced within each region. This trade flow pattern contrasts what is seen with other plastics, such as polyethylene, where the US has a significant feedstock advantage and is a major exporter.

Polypropylene in North America, specifically in the US, will have excess supply and as a result, operating rates will fall below 80% through 2026 alongside continued weakness in the demand for durable goods. The North American market will continue to experience trade flows dominated by intra-regional trade with majority of polypropylene exporting out of the US into Mexico.

The long-term market picture for Northeast Asia, particularly in China, is markedly different. Northeast Asia’s polypropylene capacity is expected to reach a peak in 2027 at 72mn t, this includes China’s rapid increase of 20mn t/yr. from 2024 to 2027. With several plants coming online in 2024, including Ningbo Jinfa New Material Phase 2 No.2 (400ktons), ExxonMobil Huizhou (850ktons) and Baofeng Energy Inner Mongolia (1500ktons). Regional production will steadily increase through 2032, outpacing demand increases; thus, the need for imports will decline as China strives toward polypropylene self-sufficiency, which already stands at 92pc as of 2023. With the decline in imports and rapid growth in production, China will likely swing to become a net exporter within the next decade.

Looking ahead, it will be interesting to see how exactly these trade flows grow and emerge. Slower than anticipated economic growth could be the greatest potential hinderance and is something to watch as the world (particularly China) continues to recover post-pandemic. As always, it is worth noting that any unforeseen disruption (political, natural disasters, etc.) could also affect the pace and trajectory in which these shifts occur.

The data and insight used in this article comes from the new Argus Polypropylene Analytics service. Request more information here.

Author: Cassidy Staggers