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Global Polypropylene market is expected to cross US$124 bln in 2019

Global Polypropylene market is expected to cross US$124 bln in 2019

14-Mar-14

Polypropylene is a thermoplastic polymer used in a wide variety of applications including packaging and labelling, textiles (e.g., ropes, thermal underwear and carpets), stationery, plastic parts and reusable containers of various types, laboratory equipment, loudspeakers, automotive components, and polymer banknotes. An addition polymer made from the monomer propylene, it is rugged and unusually resistant to many chemical solvents, bases and acids. The global polypropylene market has been under a lot of pressure lately from scarce propylene feedstock and slack demand. The demand for polypropylene has been highly impacted by use in recurrent markets such as for construction and automotive. Following the recession period and the slow revival state during the post-crisis years, the global market for polypropylene is seeing considerable demand increases as the key end-use fields expand production volumes. At a global level, polypropylene production and demand were dominated by developed countries in the early 2000s. An expanding population base, improving lifestyle, rapid industrialisation and economical robustness have resulted in the substantial growth of polypropylene demand in the developing markets of the Asia-Pacific region. China has emerged as a global leader in terms of polypropylene production and consumption, while the relatively developed markets of South Korea and Japan already accounted for major shares. A similar growth pattern has been observed in the Indian polypropylene market. As per Companies And Markets.com, global demand for polypropylene has increased over the last decade due to increased consumption by end-use industries worldwide. The packaging industry was the largest end-use segment in 2011, when it accounted for around 30% of global polypropylene demand. The equipment and facilities industry demonstrated the second highest growth rate in terms of polypropylene demand during this period. Geographically, the Asia-Pacific region dominated demand growth in the global market, while the highest growth rate was demonstrated by the Middle East and Africa region, where demand for polypropylene increased exponentially between 2000 and 2011. North America was the only region where polypropylene demand registered a net decline.

The global polypropylene market was valued at US$77.46 bln in 2012 and is expected to reach US$124.01 bln by 2019, growing at a CAGR of 6.3% from 2013 to 2019. Growing demand from end-use industries such as packaging, automotive and consumer products is expected to drive the market, as per Transparency Market Research. In addition, factors such as changing lifestyles and increasing disposable incomes in Asia Pacific are further driving the market for various end-use industries. However, growing environmental issues and volatile raw material prices are expected to inhibit the market growth. Increasing demand for bio-based polymers has shifted the focus of polypropylene manufacturers from synthetic to bio-based polypropylene. Packaging emerged as the largest and fastest growing end-use segment and accounted for over 50% of the total market in 2012. Changing consumer food habits and high competition in consumer products sector in emerging economies is expected to escalate market growth. Automotive was the second largest end-use industry in terms of volume and is expected to grow at a CAGR of 5.7% from 2013 to 2019. The demand of polypropylene in consumer products was 7.1 mln tons in 2012. China dominated the polypropylene market that was valued at US$23.73 bln in 2012. It is expected to be the fastest growing market due to high demand of polypropylene from end-use industries. The consumption of polypropylene is phenomenal in automotive industries of Europe. The European market in terms of revenue is expected to grow at a CAGR of 5.9% from 2013 to 2019. The demand for polypropylene in Rest of Asia Pacific was 7.01 mln tons in 2012. Product innovation and capacity addition is expected to drive the market growth. The global polypropylene market is highly fragmented as top five players accounted for nearly 35% of the market in 2012. Some of the major players which dominated the market include Braskem, LyondellBasell, INEOS, Sinopec, SABIC, PetroChina, Reliance Industries Limited and Borealis among others. Demand within the polypropylene market has been forecast to increase at a compound annual growth rate (CAGR) of 4.5% over the next nine years, rising from a total of 42.3 million tons in 2011, to reach 62.4 million tons by 2020.

Global demand for polypropylene in 2000 amounted to 25,107,534 tons, increasing to 42,302,126 in 2011. Global demand for polypropylene has increased over the last decade due to increased consumption by enduse industries worldwide. The packaging industry was the largest end-use segment in 2011, when it accounted for around 30% of global polypropylene demand. The equipment and facilities industry demonstrated the second highest growth rate in terms of polypropylene demand during this period. Geographically, the Asia-Pacific region dominated demand growth in the global market, while the highest growth rate was demonstrated by the Middle East and Africa region, where demand for polypropylene increased exponentially between 2000 and 2011. North America was the only region where polypropylene demand registered a net decline. During the forecast period, polypropylene demand in North America is expected to recover, whereas the Eurozone crisis is expected to restrict the future growth of the market in European countries. The increasing trend of polypropylene demand in Asia-Pacific and the Middle East and Africa is expected to continue in future, with the Asia-Pacific region expected to account for a 62.2% share of global demand in 2020, which is expected to have reached a total of 62,412,550 tons, as per Companies and Markets.com. At a global level, polypropylene production and demand were dominated by developed countries in the early 2000s. An expanding population base, improving lifestyle, rapid industrialization and economical robustness have resulted in the substantial growth of polypropylene demand in the developing markets of the Asia-Pacific region. China has emerged as a global leader in terms of polypropylene production and consumption, while the relatively developed markets of South Korea and Japan already accounted for majorshares. A similar growth pattern has been observed in the Indian polypropylene market. China and India are expected to generate more than 12m tons of demand during the forecast period from 2011 to 2020. This is expected to be equivalent to more than 84% of regional demand growth and more than 63% of global demand growth expectations for polypropylene during the same period. Packaging  is still expected to  be the largest contributor to  demand growth, although other end-use segments  are also expected to boost their polypropylene consumption during the forecast period. The packaging industry was the leading polypropylene consumer in the global polypropylene market and accounted for the largest amount of polypropylene market growth between 2000 and 2011. High growth in the retail industry was largely responsible for the high growth of polypropylene consumption in the packaging industry. Other industries, such as electrical, equipment and facilities, and household appliances, also registered substantial growth in polypropylene consumption, and contributed to the growth of global polypropylene demand between 2000 and 2011. The packaging industry is expected to continue to be the leading end-use industry in terms of polypropylene consumption at a global level. Substantial growth expectations from the retail industry and changing lifestyles are driving the growth of the packaging industry. The growth of the packaging industry is expected to  drive  polypropylene  consumption  at  a  global  level.  The  equipment  and  facilities  industry  and  the electrical industry are also expected to register high growth in terms of polypropylene demand during the forecast period. However, the contributions that are expected to be made by these industries are still expected to be lower than that made by the packaging industry during the forecast period. There have been numerous feedstock variations in the global petrochemical market since 2000. The evolution of various new/viable options in the global petrochemical market has changed the scenario of global petrochemical dominance and productivity potential. The availability of inexpensive crude oil in the Middle East, abundantly available coal-based processes in China, and shale gas technology in the US has revolutionized the aliphatic petrochemical industry over the last decade. On the one hand, changes in the Middle East and Asian markets are increasing the cheap supply of propylene. On the other hand, shale gas has diminished the supply of propylene, fueling price hikes in the market. On-purpose technology for propylene was also unable to guarantee that expected demand supply gap could be compensated for. The shortage of propylene supply and heavy fluctuations in crude oil prices resulted in substantial price hikes in the polypropylene market in the first quarters of 2011 and 2012. These price hikes cannot be easily transferred to polypropylene consumers or end-use markets for polypropylene. If the market stabilizes in line with global economic and political settlement, prices of propylene, and therefore of polypropylene, are expected to come down during 2013 and 2014. On the manufacturing front, propylene price changes between 2000 and 2011, which resulted from tight supply or crude oil price, have had an adverse effect on the  profit  margins  of  polypropyl producers.  Should  this  scenario  continue,  it  may  impede  the development of the polypropylene market during the forecast period.

India’s Polypropylene capacity is estimated to grow 5155,000 tpa by 2017. Polypropylene demand in India grew from 1535000 tpa in 2006 to 3072000 tpa in 2012, at a CAGR of 12.3%. As per Indian Petro Group, production capacity more than doubled during this period to reach 4190,000 tpa in 2012 from 1945000 tons in 2006. Domestic production of PP kept pace with demand, increasing from 1844,000 tons in 2006 to 3692000 tons in 2012 (CAGR of 12.3%). Production exceeds demand in the Indian PP market and India exported over 800,000 tons of PP in 2011 and 2012. India imports about 250,000 tons of PP every year in spite of production exceeding demand as imported PP is cheaper than domestic PP in some cases. In 2012-13, RIL continued to dominate the Indian market with a share of 64%. Four companies- RIL, HPL, HPCL (HMEL) and IOCL - are the major producers of Polypropylene in India. ONGC (OPaL), MRPL and BCPL (Brahmaputra Cracker and Polymer Ltd) are expected to join this elite club when their petrochemical (PP) plants are completed. Capacity additions by major players will increase production substantially over the next 5 years. Capacity is expected to reach 5155,000 tpa by 2017. Overall domestic PP production is forecast to grow at a CAGR of about 6.1%. Robust demand growth is expected over the next five years and rate of growth of demand will be 10.3% pa. As production fails to keep pace with demand, we expect exports to peak at around 900,000 tons in 2013 and 2014 before declining steeply during the period 2015-17. By 2018, India could become a net importer of PP in the absence of any new large capacity additions.

Polypropylene remains one of the fastest growing sectors in India and around the world. PP is the second most widely traded polymer in the world after polyethylene. Global demand for polymers has reached about 218 mln tons and the share of polypropylene in total polymer consumption is about 25%. PP is used in a host of applications across sectors such as automobiles, FMCG, textile, agriculture, housing, health-care, electronics and infrastructure due to its versatility, ease of manufacturing, cost efficiency and affordability. PP is used for a variety of end-uses:

  • PP is used to make Raffia used in carpets, packaging material and geotextiles
  • Biaxially Oriented Polypropylene (BOPP) films are used in a variety of applications including flexible packaging, pressure sensitive tape, printing and lamination, stationary items, cable wrap and insulation
  • PP homo polymers are used for Injection molding to make components for automobiles, appliances, furniture, industrial products and a host of other products
  • PP ICP (Impact copolymers) are used to manufacture pipes, films, injection molding (caps, batteries, pails, automotive and other components) and for thermoforming
  • TQPP (Tubular Quenched PP) film is used in the textile industry, food industry, footwear, utensils, packaging of snacks and bakery foods
PP Random copolymer (RCP) is used to make heat seal films, blow molded bottles and injection molded parts.
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