Rapid Surge in Polypropylene (PP) Production Capacity Floods Impact Market Prices

From 2021 to2025In [year], China's polypropylene (PPThe industry has entered a period of concentrated capacity release, with the scale of new capacity reaching a historic high. However, at the same time, the growth in demand has been relatively slow.PPThe price index continues to decline, and the supply-demand pattern has undergone significant changes.

Data source: JLC

Production capacity continues to grow rapidly, putting pressure on prices.

New capacity additions from 2021 to 2025 exceed2000 10,000 tons, average annual increase in production capacity400around ten thousand tons, with an average annual growth rate of11%The newly added capacity mainly comes from large private refining projects, with single-line capacity further increased to30-60Between ten thousand tons, Yulong Petrochemical190Ten thousand tons, Zhejiang Petrochemical Phase II90 Ten thousand tons, Jinneng Technology13510,000 tons per year, Zhongjing Petrochemical Phase II120 10,000 tons, Kingfa Sci. & Tech. Co., Ltd.8010,000 tons, Ningbo Daxie Petrochemical120Enterprises with an annual capacity of ten thousand tons; coal-to-olefin project, Inner Mongolia Baofeng15010,000 tons; additionally, the wholly-owned enterprise ExxonMobil Huizhou95Enterprises with a production capacity of ten thousand tons have been put into operation one after another.2025Annual new production capacity remains concentrated, as of9Month, newly added production capacity495.510,000 tons, the total domestic production capacity of polypropylene reached4864.5Ten thousand tons. Domestic polypropylene production capacity has seen explosive growth, and the import dependency rate has dropped to...10%The following, however, shows that the situation of oversupply is becoming increasingly evident.

Gold Union Innovation MonitoringPPFrom the perspective of the price index, in a situation of ample supply, the price index declines year by year. As of2025 9 PPThe average price index is7345 /tons, a year-on-year decrease352 /Ton, decrease4.57%。

2. Slowing demand growth and a clear imbalance between strong supply and weak demand

Data Source: JLC Network Technology

Although polypropylene has a wide range of applications, its apparent consumption growth rate is far lower than the speed of supply expansion. The growth rate of polypropylene apparent consumption has been slowing down year by year, with the growth rate shifting from...9% 3%Traditional demand remains weak, supported only by rigid demand. Traditional PP consumption industries such as plastic weaving and home appliances are experiencing sluggish growth, while high-end applications (such as automotive lightweighting and medical materials) have yet to fully fill the gap. The general-purpose materials face fierce competition among homogeneous products, and the economic slowdown has impacted the growth of orders in downstream industries. Demand for high-end series products has increased, but it is difficult to drive overall industry improvement.

3. The polypropylene industry will continue to face pressure in the future.

2021-2025PPThe market is showing a trend of "increasing volume without increasing profits."2025After the holiday, there are still over ten million tons of planned production capacity pending launch, but the actual implementation remains to be seen. Manufacturers need to break the deadlock through technological upgrades and demand innovation. In recent years, newly launched enterprises have mostly targeted high-end, high value-added products to enhance their own competitiveness. In the coming years, the industry may enter a period of intense consolidation, with the government introducing policies to counter excessive internal competition.”Measures such as "phasing out outdated production capacity" are being implemented to guide the industry towards healthy development.