China PP Capacity Expansions Bring Chance to Export Business
Foreword: With the rapid expansion of capacity in China, the supply of PP (polypropylene) is expected to be ample, and export has gradually become one of the important directions for domestic companies to cope with fierce market competition and develop further. Although high exports in 2021 cannot be replicated, exports are expected to be a starting point for easing domestic supply pressure in 2022 with rapid capacity expansion and low prices in China.
China’s PP supply trends to be plentiful, improving companies’ initiatives in searching for export opportunities.
With the development of the domestic energy and chemical industry layout, the capacity in the olefin industry has continued to expand. As the downstream product of energy and chemical industry, PP faces rapidly growing capacity. In 2021, the capacity reached 31.31 million mt. In 2022, the newly added capacity is expected to be 6.83 million mt. PP supply will gradually turn sufficient.
In 2021, China’s PP export volume registered a Y-O-Y growth of 243.96%, boosted by the supply crunch overseas. More and more domestic companies succeeded in the export business. In early 2022, there is still an arbitrage opportunity in the PP export market. Recently producers and traders in China indicated that they caught increasing inquiries and favorable orders from the export market. PP exports not only flowed into Southeast Asia such as Vietnam but also went to South Asia such as Pakistan, Europe such as Turkey, etc. The arbitrage window stayed open, bringing more opportunities for PP producers and traders in China to develop export businesses.
In this context, how is the global trade flow of PP? What changes will China’s PP trade flow have in 2021? Where are the major export destinations of China-origin PP? More questions about exports have also attracted the attention of more industry insiders. SCI will take you to understand through the interpretation of export data.
Global trade flows of PP were frequent in 2021 because of overseas supply shortages.
PP global trade flows are relatively simple. Around 2010, the concentrated capacity expansion in the Middle East made it replace North America and become the world’s most important net export area. In addition to Europe and Africa, some of the Middle East-origin goods flowed to China and Southeast Asia, by virtue of preferred cost performance. North America-origin goods mainly flowed to South America, and a small number of them flowed to Europe and fewer to China. The trade exchanges between companies in Northeast Asia and Southeast Asia were close and complemented each other.
Under the circumstance of tight overseas supply, global flows of PP goods became more obvious in 2021, and the trade supplements among various regions were also promoted. In 2021, the tight supply caused by units’ shutdown and the strong demand in the United States boomed the international PP prices. Coupled with the severe public health event in Southeast Asia, South Asia, etc., the global trade flow became more frequent. Prices in the Middle East and Asia were relatively low. As low-valued goods were inclined to flow to high-valued areas, the Middle East-origin goods flowed to the European and American markets. As a depression in PP prices, China has supplemented export resources to some countries and regions where the Middle East and North America were the main importing countries, such as Africa, South America, Southeast Asia, South Asia, etc. Therefore, in 2021, China’s PP export volume and export destinations witnessed significant changes.
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