Major events of China PP market in 2020

In 2020, for the PP industry chain, is destined to be an extraordinary year, from PP non-woven fabrics, to BOPP, and to PP raw materials, all of them perform wonderfully to varying degrees, and they are all in the limelight. Let’s briefly combs the operation of the PP industry chain in 2020 in chronological order.

Since late January, COVID-19 has gradually spread, and pandemic prevention measures have been implemented throughout China.

In February, under the pandemic, the transportation of logistics across the country has blocked on a large scale after the Spring Festival holiday, and the work resumption of enterprises have postponed. In terms of new start-ups, Zhejiang Petroleum & Chemical, Hengli Petrochemical II and Hebei Lihe Zhixin I have been put into production. As for the downstream, market price of meltblown nonwoven fabric surged, which have moved to 600,000yuan/mt. With the gradual control of the China domestic epidemic, the price have dropped to 300,000yuan/mt. In addition, Sinopec urgently built 10 production lines to produce meltblown nonwoven fabric.

In March, downstream resumed work and production, however, since the pandemic spread rapidly overseas, overseas market demand weakened while the demand for medical and sanitary materials such as masks and protective clothing increased again, and the price of meltblown nonwoven fabric rose up to around 500,000yuan/mt even above once again. As for downstream, Sinopec has built 6 new meltblown nonwoven fabric production lines, and PetroChina has built 4 meltblown nonwoven fabric production lines.

In April, it’s heard that some traders use PP fiber to replace meltblown nonwoven fabric, as the price of meltblown nonwoven fabric is high, and there is a phenomenon of producing these kind of masks in small workshops across the country. It has greatly stimulated the demand for PP fiber, and speculators have been involved in the market. Taking S2040 as an example, the price was around 700yuan/mt at the end of March, and rose to 65,000yuan/mt in mid-April. The huge profits urged upstream plants switch production line to PP fiber intensively, resulting in the mismatch pattern of supply and demand in the industrial chain, which continued to affect market in the second and third quarters of 2020. PP fiber has drove the overall price of PP with its own effort, downstream profit margins have been narrowed, and more plants shut or lowered their operating rates. In the second half of the month, due to administrative intervention, the speculative atmosphere in PP fiber market has diminished, and prices fell rapidly. In the downstream, Sinopec's six meltblown nonwoven fabric production lines have been completed and put into production.

From May to June, many China domestic PP plants shut for turnaround, and PP imports has increased significantly. In the downstream, 16 meltblown nonwoven fabric production lines of Sinopec have put into operation, and 4 meltblown nonwoven fabric production lines of PetroChina have put into operation.

From July to November, PP imports remained high.

In September, in terms of the new plants, Zhongke (Guangdong) Refining & Chemical, Liaoning Bora Enterprise Group and Sinochem Quanzhou II have been officially put into production.

From October to November, the demand for downstream BOPP increased more than expected, prices and profits hit record highs repeatedly, and the spot market was in dearth of supply. In terms of new plants, Wanhua Chemical Group and Shaanxi Yanchang ChinaCoal II have officially put into production in November. On November 15, 2020, the fourth Regional Comprehensive Economic Partnership ((RCEP)) leaders' meeting was held in video mode. After the meeting, 10 ASEAN countries and 15 Asia-Pacific countries, including China, Japan, South Korea, Australia and New Zealand, formally signed the Regional Comprehensive Economic Partnership Agreement ((Regional Comprehensive Economic Partnership, RCEP).

In December, due to environmental protection in North China and power restriction policies in East China, the operating rates of downstream plants have been affected and demand weakens, and PP prices declines gradually.