SCI Field Visit on East China PP Downstream Enterprise Operation Variation
Introduction: In recent years, the characteristics of peak and slack seasons in most downstream industries of PP have significantly weakened, with the market players increasingly focusing on changes in actual demand and industry operational conditions. Market participants are full of expectations for the sustained effect of policies and the implementation of growth-stabilizing measures proposed at the Two Sessions, while these prospects still need to be validated through subsequent actual demand performance. This field visit covers multiple downstream fields to present the current demand situation and future trends.
This research and field visit encompassed multiple downstream fields, including film packaging, cosmetics packaging, modified products, small home appliances, household daily necessities and pipes. The article will focus on presenting the current demand status and development trends identified in downstream manufacturers during this investigation, aiming to provide valuable reference insights for market participants.
1. Changes in sales channel and purchase model impair the demand peak and slack seasonal characteristics.
The findings from this research across multiple key downstream industries indicate that the diversification of consumer shopping channels has weakened the demand distinction between traditional peak and slack seasons. Taking sectors such as cosmetic packaging, daily necessity packaging, home appliance and home decoration as examples, the emergence of e-commerce platforms and major online shopping festivals on November 11th, December 12th and June 18th has significantly diluted conventional seasonal sale patterns. Meanwhile, increasingly mature marketing strategies and extended promotional cycles on e-commerce platforms have further blurred time-specific consumption patterns in online shopping. Additionally, large-scale downstream enterprises have notably intensified strategic procurement practices such as fixed-price transactions at lows and earlier-than-expected stockpiling, consuming demand that will traditionally emerge during peak seasons. These enterprises typically optimize procurement cycles during market downturns while adopting strategic price-locked inventory strategies to secure profit margins, control purchasing costs and reduce warehousing expenses.
2. Channel-specific customization needs facilitate multi-variety and low-volume procurement models.
Research indicates that as consumer demand becomes increasingly personalized and customized, e-commerce platforms and offline supermarkets are driving suppliers to introduce more differentiated products and packaging to meet consumer preferences while avoiding price comparisons across platforms. Consequently, the growing market demand for customization has gradually shifted traditional bulk procurement models towards multi-variety and low-volume procurement patterns. This small batch procurement also enhances inventory turnover rates and reduces capital tied up in inventory.
3. Cost Optimization at Enterprises Strengthens PP’s Substitution Effect Over Other Materials
According to this research, some enterprises say that in recent years, PP has increasingly replaced materials such as ABS and PA in the home appliance and automotive components industries, leveraging its cost advantages and performance improvements driven by technological advancements. Modified product enterprises typically modify the material by adding toughening agents (e.g., POE or EPDM) to improve impact resistance of PP, or reinforcing agents like glass fibers to boost rigidity and strength. These modifications enable PP to be applied in automotive exterior parts and home appliance shells. Additionally, consumer preferences shift toward softer and more flexible tactile experiences, such as the growing demand for soft-touch materials in home appliances and electric vehicles, which have further expanded PP’s substitution potential over ABS.
4. Downstream enterprises enhance their internal control capabilities by extending the industrial chain both horizontally and vertically.
This survey has found that, in order to improve enterprise efficiency, reduce costs or explore new markets, some downstream enterprises have adopted the following strategies. On the one hand, there is the vertical extension of the industrial chain with some enterprises improving the utilization rate of by-products. For instance, they classify by-products and tap into their value, thus increasing the added value of products and achieving the recycling of resources. For example, a grain and oil enterprise has adopted a rice circular economy model to fully exploit the value of by-products. On the other hand, there is the horizontal extension of the industrial chain with some enterprises choosing to establish trading companies and create an integrated industry-trade model to gain control over sales resources. For example, a modified materials enterprise has established a subsidiary to integrate the supply chain and sales end, enhancing its market competitiveness.
These measures not only help reduce costs but also open up new market growth points and enhance the overall operational capabilities of enterprises.
The above summarizes some notable changes and trends reported by downstream enterprises during the visit research on PP downstream industries. In the future, SCI will maintain close communication with key downstream enterprises to monitor and report on industry dynamics including order status, procurement patterns and demand growth forecast.
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