N95 mask is popular in domestic market, the expansion of production capacity stirs up the industrial chain. PP market will face great changes?

 Polypropylene (PP), as one of the five general plastics in China, is widely used. Plastic woven bags, films on the outside of packaging materials, masks, non-woven protective clothing, wave buckets inside washing machines, and car bumpers are all made of polypropylene. 

It is precisely because of the wide range of applications of polypropylene (PP) that it has a huge demand for use every year. There is demand, there is supply. With China becoming a world factory, the demand for polypropylene capacity expansion is obvious.

It is understood that at the beginning of 2022, the planned new capacity of the industry statistics is about 7.35 million tons. Up to now, 2.8 million tons have been put into production in the first half of the year and 1.8 million tons in the second half of the year. Compared with the production capacity in 2021, the growth rate is 14.69%. In terms of growth rate, it is 11.9% higher than the average growth rate of polypropylene plants in the last 10 years, and 13.1% higher than the average production capacity growth rate in the last 5 years.

At present, there will be 10.9 million tons PP capacity waiting to be released in 2023. Domestic competition is becoming increasingly fierce, which also inhibits the rise of market prices.

"From the time of production next year, there will be a large amount of new supply in the market after the Spring Festival, especially the fierce competition in the price of general materials. In addition, the overall operating rate of the downstream is low around the Spring Festival, so the overall pressure in the first quarter is large, and the price is difficult to show a bright performance." Teng Meixia said that, for the industry, the industry's capacity utilization rate will decline in the future, and it is expected that the overall polypropylene (PP) production growth rate will be lower than the capacity growth rate.

"Due to the rapid expansion of the production capacity of polypropylene(PP), the sales of polypropylene(PP) may face certain price pressure. From the perspective of spot trade, spot sales will be more regional. From the perspective of technology, the sales pressure of polypropylene generic materials will increase. Polypropylene manufacturers may choose to produce some more profitable brand segments to cope with market competition." Lu Jiaming said.

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