SCI Field Visit on East China PP Downstream Industry 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. In December 2024, the Central Economic Work Conference designated “Vigorously boosting consumption, enhancing investment efficiency and comprehensively expanding domestic demand” as the top priorities for 2025. There are high expectations in the market regarding the sustained effectiveness of policies and the implementation of growth-stabilizing measures proposed during the Two Sessions, and these prospects still need to be validated through subsequent actual demand performance.
Major PP downstream industries have experienced noticeable changes in recent years, and the seasonal characteristics regarding operations in peak and slack seasons diminished gradually. How do actual orders, profitability, feedstock inventory and finished product inventory perform at downstream enterprises after the Spring Festival holiday? Have export orders been affected by tariff policies? What strategies are deployed for overseas market expansion? Given expectations of additional policies concerning economic stimulus, what is the outlook for downstream industries in 2025? To address these questions, SCI conducted field visits and surveys in March 2025 with nine major PP downstream factories in East China. By analyzing the unique characteristics of different downstream fields, this study provides in-depth insights into the real development of the industry, offering guidance for market trends and strategic decision-making.
1. In most PP downstream industries, leading enterprises continue to expand their market share, driving up the industry concentration ratio.
In recent years, the capacity in key PP downstream fields has maintained an expansion trend. On one hand, major downstream enterprises are actively expanding production to maintain or enhance their market share. On the other hand, fields like modified plastics and home appliances exhibit pronounced “Matthew Effect” dynamics, where leading enterprises leverage advantages in production costs, brand influence, and technological and unit capabilities to solidify their dominant market positions. This consolidation has intensified competition, squeezing the survival space and profit margins of small and medium-sized enterprises. Many smaller factories have exited the market over the past two years amid low-price competition and oversupply pressure.
2. Industry competition intensifies as the strategy of small profits but quick turnover begins.
Sluggish global economic growth, higher employment pressure and shifting consumer habits toward saving over spending have eroded market confidence, leading to a slow recovery in end-user consumption. Meanwhile, continuous capacity expansion by leading downstream enterprises has further exacerbated supply pressure. The oversupply-driven structural imbalance has triggered a self-regulatory market adjustment, plunging the industry into cut-throat and low-priced competition. This competitive dynamic has trapped most fields in a low-margin quagmire, signaling the start of an era defined by “quick sales and small profitability”.
3. Sino-U.S. trade frictions spur Chinese enterprises to diversify market layout.
Against the backdrop of intensified domestic competition and Sino-U.S. trade frictions, globalization has become an inevitable trend for Chinese downstream enterprises. Many enterprises have launched a new wave of overseas factory investments after the pandemic, with clear patterns in factory types and locations. For instance, overseas factories are often established in Southeast Asian countries like Indonesia, Vietnam and Malaysia to lower production costs. Some factories are established in European and American countries for R&D (research and development), sales and preferential trade policies. Especially in 2025, Trump imposes an additional tariff of 20% on Chinese imports, which raises trade barriers for plastic products exported to the U.S. Overseas factories not only bypass tariffs but also expand market access. Additionally, re-export trade has gained prominence. Some factories send semi-finished products to Southeast Asian subsidiaries for final processing and assembling before re-exporting to other countries, reducing effective tariffs. Meanwhile, overseas subsidiaries gave orders back to Chinese factories, capitalizing on China’s advantages in cost competitiveness and integrated supply chains. The Sino-U.S. trade friction has underscored the urgency for Chinese enterprises to diversify their market presence. These strategic adjustments help enterprises to maintain competitive advantages amid evolving global trade dynamics.
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