High-MFR PP Copolymer Supply Occupying a Higher Proportion
Preface: In recent years, there were more ICP production lines with rapid capacity expansions, and ICP capacity also mounted up. Especially since 2020, private refineries and PDH enterprises put their new units into operation and quickly began to produce ICP, contributing to the ICP capacity growth. During this process, the adjustment of ICP internal structure also accelerated. The proportion of low-MFR ICP declined, while that of high-MFR ICP registered a remarkable increment.
Remarks: ICP = impact copolymer PP; MFR = melt mass-flow rate
At present, the ICP demanded in China is mainly divided into three categories involving low-MFR copolymer (index below 5g/10min), medium-MFR copolymer (index at 5-20g/10min) and high-MFR copolymer (index above 20g/10min) according to the MFR. According to the monitoring of changes in the output data of ICP sub-categories in the past five years by SCI, the proportion of low-MFR copolymer output continued to decline slightly from 2018 to 2022, while that of high-MFR copolymer output showed a clear upward trend. The proportion of medium-MFR copolymer output plunged in 2021 but then remained largely stable in 2022.
Remarks: The following ICP capacity statistics only involve units that produce ICP in the current year. Previously existing ICP units that don’t produce ICP in the current year are excluded.
From the perspective of structure, low-MFR PP copolymer output accounts for more than half of the total ICP output, indicating that low-MFR copolymer is a category with a wide range of applications and a large amount of consumption. However, from the perspective of structural changes, the proportion of low-MFR copolymer output in 2022 was 54.13%, which was 1.33 percentage points lower than that in 2018 and lower than that in 2021 as well. In recent years, there were more producers and production lines of low-MFR copolymer with constant capacity expansions. In 2022, low-MFR copolymer capacity reached 12,730kt/a, up 4,300kt/a from 2018. Meanwhile, the increase in capacity led to ample supply and fierce competition, which made the output growth slow down. Especially in 2022, producers showed softer appetites in production schedule because of weak liquidity of cargoes, and low-MFR output also took a smaller proportion.
In recent years, the output of medium-MFR PP copolymer has increased relatively slowly. In 2022, the proportion of medium-MFR PP copolymer output accounted for only 17.51%, which was basically the same as that in 2021 but decreased by nearly 2 percentage points compared with 2018. The users of medium-MFR PP copolymer are mostly modified processing, home appliances and small home appliances enterprises. Downstream enterprises have relatively free choice of feedstock, easy adjustment of formula and strong bargaining power, and the market competition was relatively fierce. In addition, according to the difference in impact strength and flexural modulus, the main application directions of different medium-MFR copolymer grades are slightly different, and the consumption space is relatively narrow. Thus, new enterprises represented mediocre willingness in medium-MFR copolymer production. As a result, the production scheduling of well-recognized medium-MFR copolymer grades was relatively stable in the past few years, but that of other new resources was unsteady. In 2022, although a majority of enterprises scheduled production, the output of medium-MFR copolymer was still low. Some enterprises that have scheduled production last year did not schedule the production of medium-MFR copolymer in 2022.
In 2022, the high-MFR PP copolymer output occupied a higher proportion and reached 28.36%, which climbed by 1.34 percentage points from 2021 and 3.18 percentage points from 2018. High-MFR copolymer capacity expanded rapidly. For instance, Zhejiang Petroleum & Chemical, Wanhua Chemical, Liaoning Bora Petrochemical, Zhongke (Guangdong) Refinery & Petrochemical, etc. added high-MFR copolymer production lines. The supply of high-MFR PP copolymer with an index around 30g/10min became more plentiful in recent years, which replaced some imported goods. It is also a prominent signal that China’s PP producers realized a breakthrough in the high-end PP field.
China’s ICP overall output maintained favorable growth in 2022, despite that the number of ICP producers decreased. That output reached 1,819.6kt in 2022, rising by 661.9kt from 2018 and 91.6kt from 2021.
With the PP supply trending ample, especially the gradual overcapacity of general-purpose products, new entrants are more inclined to use more advanced and advantageous production technologies with a wider production prospect. It is predicted that with the upgrading of consumption concepts and product standards, the requirements for feedstock in the field of plastic products will be increasingly higher. In the future, China’s PP producers will further penetrate the specific-purpose and high-end fields and promote the PP supply structural adjustment, relying on the existing advanced technology and continuous improvement of product quality and performance.
In general, with the change in demand structure, the adjustment of ICP supply structure is also accelerating. In particular, the end industry upgrading and demand advancement driven by PP modification and electrical appliances fields are still promoting the growth of the overall demand for ICP. At the same time, there is still a supply shortage for the high-MFR PP copolymer in China, especially for copolymer with an index above 60g/10min. It is expected that the proportion of high-MFR PP copolymer supply in China will continue to increase in the future.
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