Strong Growth in the Polypropylene Market

24-Jun-08

Polypropylene (PP) is increasingly being used as a substitute for other, relatively expensive plastics. Despite rising prices, the strong demand from the packing and automotive industries, as well as from other growing sectors, such as the construction industry, has led to a continuous increase in the consumption of PP. Within the next five years, manufacturing capacities in India and China will be expanded by more than 7.5 mln tons. Saudi Arabia and the other Gulf States want to become suppliers of more than just raw materials. Large PP production facilities are being constructed in order to provide high-priced end products. PP manufacturing capacities will more than double within the next five years. Although domestic demand within the Arab nations continues to remain low, export values will be superior. The Middle East is progressing to become one of the most important suppliers of PP. Throughout Canada, the United States, and Western Europe, small PP factories with capacities of less than 200,000 tons will continue to be closed. As a result of this, over the next few years the importance of these countries as PP exporting nations will continue to diminish. Since market prices are higher as compared to China or Saudi Arabia, for example, traditional PP manufacturers are faced with significant challenges. In order to develop innovative products, they need to improve the efficiency of production through better manufacturing methods, expanded distribution networks, a greater range of services for customers, and closer cooperation with the manufacturing industry. As the newest study from Ceresana Research shows; in recent years, the worldwide PP market carried a volume of 45 mln tons and a value of approximately US$65 bln. During the next few years, there will be a considerable increase in PP capacities and an improved supply of the preliminary product, propylene. However, cost pressures are rising as a result of higher prices for raw materials, energy, and transportation. The market research company is expecting that PP revenues will more than double by 2016, on account of higher prices and greater sales volumes.