Maximum polypropylene capacity additions till 2015 will be in Asia Pacific region

06-Aug-09

The Asia Pacific region has more than 10 mln tons of planned capacity additions accounting for more than 50% of the global planned capacity additions until 2015. The demand growth in rapidly developing economies of China and India are the reasons for the rapid capacity build up in the region. These two countries have more than seven million tons of planned capacity additions until 2015, accounting for more than 70% of the planned capacity additions in the Asia Pacific region as per a report by Research and Markets. China is the largest consumer and importer of polypropylene in the world. According to the report, the demand growth in the country has been more than 15% pa for the past decade and has an import dependence of more than 30% pa. The need to meet rising demand and reduce the import dependence has led to more than four million tons of planned capacity additions in the country from 2009 to 2015. The Middle East region will add more than 5 mln tons of capacity in the next five years, transforming it to become the largest exporter of polypropylene in the world. The advantage of low cost feedstock and need to diversify the region's export basket, has led to large capacity additions of polypropylene in the region. Most of the production facilities are located in Saudi Arabia and Iran and have come up in the last five years. These two countries have some of the largest reserves of crude oil and natural gas available at extremely competitive rates, giving the producers significant pricing advantage as feedstock costs account for almost 50% of the production costs of polypropylene. The capacity additions in the developed markets of North America and Europe will be negligible in the forecasted period. These regions are already suffering from low demand and high capacity and have some of the highest per capita consumption of polypropylene and lowest population growth rates. Under these scenarios, there is little scope for new capacity additions.