High-MFR PP Copolymer Demand Driven by Automobile Output and Sales Growth
Highlights: In 2024, automobile production and sales will grow steadily driven by policies, with new-energy automobiles growing favorably from the end of the third quarter to the fourth quarter. As an important material for lightweight automobile, PP has benefited significantly from this background. In particular, the demand for high-MFR PP copolymer has increased notably, which has stimulated the enthusiasm of producers for copolymer production scheduling.
Lightweight and energy-saving environmental protection are prominent development trends in the automobile industry, and they have great significance in improving fuel economy, increasing driving range and reducing exhaust emissions. Therefore, plastics are widely used in the automotive field due to their own advantages such as low density. Among many plastics used in the automotive sector, modified PP accounts for the highest proportion by virtue of its good processing performance, shock resistance, aging resistance, high strength as well as environmental protection and low cost. PP is mainly used in automobile bumpers, dashboards, steering wheels, inner door panels, etc.
High-MFR PP copolymer consumption was stimulated by the “old-for-new” policy regarding automobile industry
It is estimated that the amount of plastic used in a standard car can reach about 150 kilograms, of which PP accounts for about 70-80 kilograms. Since the “old-for-new” policy was strengthened in H2 2024, the automotive market has been significantly boosted. Especially the new energy automobile market was boomed, which further promoted the steady growth of demand for automotive plastics. It not only enhanced the consumption of modified PP for automotive applications but also brought positive effects to upstream feedstock producers in the industrial chain.
Taking the feedback from an enterprise specializing in the production of automotive-modified plastics as an example, among the modified PP for vehicles, the proportions of PP homo and copolymer are about 30% and 70% respectively. PP homo is mainly injection molded plastic with an MFR of about 10, while PP copolymer involves high-MFR copolymer products with an MFR of 30, 50-60 and even higher, including low odor, low VOC products, etc. SCI has observed that many petrochemical enterprises that produce high-MFR copolymer products have enjoyed favorable sales recently. The enthusiasm of the enterprises for producing high-MFR copolymer has also increased significantly, promoting high-MFR copolymer production share to refresh a recent two-year high.
Boosted by the policy of replacing old consumer goods with new ones, automobile sales climbed steadily in 2024. Especially, the demand for new-energy automobiles further moved up. The penetration rate of new-energy automobiles (passenger cars) exceeded 50% for the first time in July, and the demand for new-energy automobiles has begun to gradually surpass that of traditional energy automobiles. The continued reduction in automobile purchase costs amid purchase subsidies, and the favorable policies related to new-energy automobiles drove up the domestic automobile output and sales data. As of September 2024, automobile output reached 21.462 million units, an increase of 399,000 units or 1.89% over the same period in 2023. The automobile sale volume reached 21.569 million units, an increase of 503,000 units or 2.39% YOY. In addition to the improvement in domestic demand, China’s automobile export data also performed well. As the competitiveness of Chinese auto brands in the international market continues to increase, the cost-effectiveness of Chinese cars has increased, and product quality has improved. Overseas market channels have continued to expand, making Chinese automobile share in the international market gradually increase. By September 2024, the cumulative export volume of automobiles reached 4.311 million units, and therein, that of new-energy automobiles reached 1.03 million units.
Overall, the policy-driven effect has been gradually implemented in the automobile market, especially in the new-energy automobile market. The consumption of PP and high-MFR copolymer varieties has gradually gained benefits, and upstream producers in the industry chain have also responded positively. In the future, China’s domestic automobile market is still expected to maintain steady growth with the continued support of policies, and PP materials such as high-MFR copolymers will continue to play an important role.
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