PP Demand Growth Opportunities from Home Appliance and Automobile Fields
Preface: The National People’s Congress (NPC) and The Chinese People’s Political Consultative Conference (CPPCC) were held on March 5, 2024, and the 2024 China’s Government Work Report proposed various policies related to PP, such as “replacing old consumer goods with new ones”. That may further stimulate the new demand growth for PP and promote the adjustment to PP production and supply structure. The consumption potential of market players may further be unleashed amid fiercer market competition, and the confidence of participants will be boosted.
The government work report emphasizes promoting stable consumption growth. Specifically, it seeks to stimulate consumer potential through a comprehensive approach, including increasing income, optimizing supply, and reducing restrictive measures. Efforts will be made to foster and expand new types of consumption, as well as develop digital, green, and healthcare consumption. It focuses on nurturing new consumption drivers such as smart homes, entertainment tourism, sports events, and China Chic products. The report also highlights the need to stabilize and expand traditional consumption, promote the replacement of old consumer goods with new ones, and boost spending on big-ticket items such as smart-connected new energy vehicles, and electronic products. It advocates for the expansion and enhancement of services like elderly care, childcare, and domestic help, supporting social forces in providing community services. To optimize the consumer environment, it plans to launch a “Year of Promoting Consumption” campaign, implement a “Confident Consumption Action”, strengthen consumer rights protection, and put into effect paid leave systems. It also involves implementing standard enhancement actions and accelerating the building of a standard system that meets the requirements of high-quality development, constantly improving the quality of goods and services to better meet people's needs for an improved lifestyle.
PP market demand is expected to be supported from home appliance and automobile industries.
Bullish news was released during the two sessions to motivate the market’s consumption potential. The Action Plan for Promoting Large-Scale Equipment Updates and Trade-in of Consumer Goods for New (hereinafter referred to as the “Action Plan”) was released to promote the update of various equipment and technological transformation, and encourage and promote the trade-in of consumer goods. At present, various localities have successively introduced corresponding policies to promote the further implementation of “replacing old consumer goods with new ones”. According to relevant news, the Nanjing Municipal Commerce Bureau has collaborated with two leading enterprises, Suning.com and JD Five-Star, to carry out home appliance trade-in activities. From March to May, JD.com Five Star joined forces with leading home appliance brands to increase trade-in subsidies for categories such as air conditioners, refrigerators and washers, color TVs, cigarette stoves, and mobile digital devices. The maximum subsidy for a single unit is 4,000 RMB. At the same time, in terms of automobiles, five cities in Ningxia have launched specific subsidy measures for new car purchases. For example, Yinchuan City and Wuzhong City have provided subsidies of 1,000 RMB to 4,000 RMB for new automobile purchases since March. As one of the five general-purpose plastics, PP is widely used in the home appliances and automobile industries. The release of the “Action Plan” will undoubtedly inject new vitality into the automobile, home appliances and other industries, and it will also have a certain influence on the development of the supply and demand pattern of the PP industry.
The implementation of “replacing old consumer goods with new ones” is supposed to stimulate PP demand.
In recent years, in order to comply with the development of lightweight automobiles, energy conservation and environmental protection, as well as the development trend of thinner and lighter home appliances, plastics have been widely used in the automotive field, and PP has become one of the key plastic varieties used in the automotive and home appliance industries due to its good comprehensive performance. The implementation of the "replace with new" policy is expected to further drive demand for home appliances and automobiles, stimulating new demand growth points for PP.
Since 2023, home appliances and automobiles have shown passable growth momentum. In particular, the new energy automobile market has performed particularly well, with sales and exports both achieving substantial growth. In terms of home appliances, the cumulative output of washing machines, refrigerators and air conditioners all showed varying degrees of growth year-on-year. The home appliance industry showed a trend of stable domestic demand and improving external demand.
The application of PP in the fields of home appliances and automobiles is mostly achieved through modification. The modified PP has good processing performance, impact resistance, aging resistance and high strength, as well as the advantages of environmental protection and low cost. The application in automobiles plays an important role. According to a large domestic modification company, the usage of PP in a car (passenger car) can reach up to more than 50%. With the official implementation of the new round of automobile “replacing old consumer goods with new ones” policy, China’s automobile market has ushered in new development opportunities. According to data from the Ministry of Commerce of China, as of 2023, the Car Parc reached 340 million, with huge demand for replacement and unlimited potential. The “replacing old consumer goods with new ones” policy is expected to increase consumers’ purchasing desire and promote automobile renewal consumption.
In addition, home appliance is also one of the most concentrated fields of application of modified PP. Modified PP has been increasingly used in the smart furniture market due to its lightweight, corrosion resistance, flame retardancy, heat resistance, insulation and other properties. Taking home appliance as an example, the average plastic usage of each refrigerator is about 35%-40%; that of each washing machine is about 30%-35%; that of each air conditioner is about 10% -15%. At present, the domestic home appliance market has a large scale and noticeable room for demand release. Currently, home appliance industry is developing steadily. With the implementation of the “replacing old consumer goods with new ones” policy, it is expected that the domestic home appliance industry will probably bring greater demand and potential for upgrading.
In conclusion, the news released by The National People’s Congress (NPC) and The Chinese People’s Political Consultative Conference (CPPCC) underpinned the market sentiment from the macro side. Meanwhile, high feedstock costs have also buoyed the PP market. Thus, it was easy for PP prices to rise and hard to decline. According to the conference, it is predicted that the PP demand may be supported by home appliance and automobile fields, especially on the back of “replacing old consumer goods with new ones” policy and continuous upgrading of residents’ consumption levels. The development of intelligent home appliances stimulating residents’ consumption and also realizing the improvement and replacement of traditional home appliances will become a new growth point for PP demand in the future and further lead the continuous upgrading and transformation of the PP product structure.
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