China, the fastest growing economy in entire world, has been consuming very sizeable amounts all polymers including Polypropylene (PP). China 's polymer consumption was pegged at about 30 million tons in 2005, growing at 11%, almost the same rate as the GDP.

China's two-decade high economic growth has spurred the rapidly rising consumption of polypropylene. In 2000, the consumption of polypropylene increased to 6.1 million metric tons and Chinese domestic production reached 3.1 million metric tons. China consumed about 8.3 million tons of PP in 2005, of which about 5.3 million tons was met by domestic production, and the balance of approx 3 million tons was imported. Export of PP products from China accounted almost 25%, pegging actual consumption of PP in China at 6 million tons. China's import of 3.02 million metric tons of polypropylene in 2005 was well below expectations due to the imports of recycled and scrap polymer. China typically accounts for more than 40% of the globally traded polypropylene and this percentage is changing. Polypropylene demand has been growing at an average annual rate of about 13.5% pa for the past decade. While supply is increasing, it will not be enough to meet projected demand growth, but it will adversely impact polypropylene imports. While China will continue to be a major net importer of polypropylene, the net imports may not be increasing in the future, depending upon the capacity additions in China in the coming years. China is investing to add 6 million tons of PP capacity projected to commence latest by 2010. If the current growth rate of both demand and local supply were to be maintained, the polypropylene deficit would be about 2.2 million metric tons by 2010. During the period 2006-2010, when new capacity totalling more than 6 million tons come on line in China, many analysts have assumed that the consequences will be a gradual downturn in imports and a reduction in PP plant utilization rates around the world. However, one report assesses the possibility that exports into China rather than falling may actually reach 5 million tons by 2010.

Consumption of PP in the injection moulding sector, that accounts for more than 40% consumption globally, is lagging behind in China. China consumed 67-68% of its total PP in extrusion process & the remaining 32-33% in injection moulding process. Of course, it is this sector that is growing faster than extrusion sector, as the highest growth has generally been achieved by injection molding sectors notably packaging, automotive and appliance applications, reflecting more recent investment in these areas and growing local demand.
Woven fabric used for textiles is one of the largest applications accounting for almost 25% (2 million tons) of the total PP consumption in 2005. BOPP film is another major application in the extrusion process. PP film accounted for 17% (about 1.4 million tons) of the total consumption in 2005. Rigid packaging is an important application sector accounting for 12% (1 million tons). With the growth of organized retailing, China's food packaging market is set to grow and attract more foreign players as demand for rigid containers increases. Unlike film, which has become a commodity product, rigid containers are typically made locally, hence China is expected to see huge investment in the production of rigid packaging in the coming years, as growth of around 16-17% is expected in the sector compared with 3% in Europe. China is already the world's biggest producer of plastic film, made from bi-oriented polypropylene (BOPP), but with plentiful domestic capacity, demand from the growing food industry has been met by domestic players. China now produces around 1.4 million tons of film, double the amount produced and consumed in Europe . All other application sectors are relatively smaller & constitute about 3-7% (between 250-500 KT) of the consumption in 2005. Compounding activity done by independent compounders is about 7%. Automotive application is not big yet and constitutes only 2% (150 KT).

For the last few years, exports have been a massive driver of demand, but now AMI Consulting predicts that the rate of growth of demand for PP used in the domestic economy will accelerate on the back of fast growing consumer expenditure and demographic shifts towards urban living and that this shift will emerge as the key driver of demand for PP. In recent years exports have grown faster than domestic consumption. Whether this will remain the case will depend on the extent to which China can continue to leverage its low cost base. Given government policy to encourage domestic consumption and reduce the economy's reliance on exports, AMI expects that local demand will be a more significant driver for PP markets in the period to 2010.
China's demand for PP is really insatiable and will remain so for at least another decade. Despite new facility construction and capacity expansions, China 's polypropylene demand will continue to outstrip the supply. At this scale China is crucial to keeping global supply and demand in balance.