Keeping Pace with Southwest China PP Industry
Preamble: Southwest China is one of the PP trading regions, where the trading volume took up 6% of the total in China in 2022. In recent years, the capacity there has occupied a smaller proportion, which was credited to no capacity expansions. But it is predicted that Southwest China will have development potential in the medium-to-long run.
According to the traditional geographical location, Southwest China mainly includes five provinces, namely Sichuan, Chongqing, Yunnan, Guizhou and Tibet. According to the monitoring of SCI, the PP capacity proportion in Southwest China has been compressed gradually in recent years with the growth of total domestic capacity. As of June 20, 2023, the capacity proportion has shrunk from 2.80% to 1.64% in Southwest China, where 89% of the trading volume was in Sichuan and Chongqing.
On the whole, the circulation sources of goods in Sichuan and Chongqing mainly come from PetroChina and coal chemical enterprises. Therein, Chengdu City relies on PetroChina Sichuan Petrochemical, which is the main storage area of PetroChina. PetroChina resources account for the majority in Chengdu City, where the cargo barriers are strong. Only a few coal chemical resources can flow into Chengdu City. Some resources produced by Liaoning Bora Petrochemical and Shenhua Ningxia Coal Industry enter Chengdu City. Shenhua Group has a pick-up point in Chengdu City for auction resources, and the enterprise’s raffia materials are circulated considerably in Chengdu City. For the demand side, downstream enterprises are dominated by plastic woven and film factories, which determines that raffia takes the largest proportion of total circulated PP, while injection, thin-walled injection and copolymer take a small proportion. The local raffia resources in Chengdu City mainly flow to factories whose business covers film, cement, feed woven bags, fertilizer woven bags, PP disposable water cups, color strip cloth, etc. In addition, copolymer resources mostly flow to washing machines, pipes and modified product enterprises. The market distribution center is mainly located in China Plastic City, Xindu District of Chengdu City.
The Chongqing market is a trade and consumption market, and there is no local producer. Chongqing South Railway Station and East Railway Station commercial storage logistics centers are relatively concentrated trading markets in Chongqing, and the distribution of PetroChina resources is convenient there. As a result, the inflow resources are mostly from PetroChina and coal chemical enterprises, including PetroChina Lanzhou Petrochemical (homo PP injection), PetroChina Dushanzi Petrochemical (low-MFR copolymer), Shenhua Ningxia Coal Industry (raffia, injection and low-MFR copolymer), China Coal Shaanxi Yulin Energy & Chemical (raffia), etc. Downstream enterprises mainly use raffia and homo injection as feedstocks in Chongqing, while copolymer, thin-walled injection and fiber are used narrowly. Downstream enterprises are mostly civilian goods (homo injection products), small-sized home appliances and battery producers.
The PP capacity proportion in Southwest China is small at present, and there is no capacity expansion plan there this year. However, the policy that China vigorously supports the Southwest China development has stayed immobile in recent ten years, so its regional strategic position has been improved remarkably and a large quantity of fixed investment has been attracted. Besides, in the face of a tight balance between supply and demand in North China, East China and South China, the slow growth in demand has not changed. In conclusion, the Southwest China market has large development prospects, strong geographical environment advantage and vast market potential.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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