A tripartite competition in China’s polypropylene industry
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An era of tripartite competition in China’s polypropylene industry has arrived. The world’s three major polypropylene giants – Basell, BP, and ExxonMobil – have all entered the Chinese market, forming joint ventures with local companies to build world-class integrated petrochemical complexes, which include three polypropylene production units with a total capacity of 890,000 tons per year； **As early as over 10 years ago, China Travel (Group) Co., Ltd. jointly invested with the former Lanzhou Refining and Chemical Industry Complex in building a polypropylene production facility. The domestic market is also highly competitive: private enterprises that have traditionally operated in the downstream processing of petrochemical materials are, thanks to their rapidly growing financial strength in recent years, expanding into upstream industries. Dalian Shide Group is one of the world’s largest producers of PVC profiles. It is joining forces with Saudi company Sabic to build a world-class integrated petrochemical complex, which will include a polypropylene plant with an annual production capacity of 660,000 tons. It is reported that some private enterprises in Zhejiang and Fujian are currently using imported propylene as raw material to build polypropylene production facilities. The entry of foreign capital, the involvement of Hong Kong and Taiwanese businesses, and the participation of private enterprises have broken the monopoly held by state-owned capital. Investment entities are moving toward diversification, and unlike the small-scale, mass investment patterns of the past, these entities are adopting investment strategies that emphasize scale and technology. In newly built polypropylene plants, whether funded by state capital, private capital, or foreign capital, the annual production capacity is generally above 300,000 tons, indicating that all parties recognize the importance of scale in future market competition. At the same time, the traditional propylene production methods can no longer meet the growing demand for downstream products such as polypropylene; as a supplement to propylene sources, other propylene production technologies have emerged, and the raw material sources are also becoming more diversified. Overall, the peak period for capacity expansion of polypropylene in China will fall in 2008 and 2009. Due to the excessive concentration of new production capacity, the market has to deal with the capacity generated during the peak period of expansion, facing enormous pressure as a result. During this period, once several large-scale export-oriented production facilities in the Middle East come online, a large volume of products will flood the Chinese market, thereby **intensifying competition** in China’s polypropylene sector. At the same time, manufacturing enterprises in China will also face severe impacts; in particular, small and medium-sized firms will find it difficult to compete, thus ending up under pressure from both inside and outside, and a reshuffle of the entire industry will be inevitable. It is foreseeable that around 2010, following large-scale industry consolidation and product structure adjustments, domestic small and medium-sized plants will gradually fade from the market. Meanwhile, the two giants Sinopec and CNPC will see a significant boost in their competitiveness through capacity expansion and technological advancements, and will continue to dominate the domestic polypropylene market. As additional capital entering the market, it will continue to compete in China’s polypropylene market thanks to its unique production processes and larger scale of production. It is undeniable, however, that China’s polypropylene industry is entering an era of competition between two dominant players.
Agreed! ! Currently, the petrochemical industry is constantly expanding. Companies that were established earlier, such as Fushun Petrochemical in Northeast China, Daqing, and Jinxi, are all undergoing expansion. As a result, state-owned enterprises are now feeling the pressure of this crisis! !
The production of chemical raw materials is the cornerstone of the heavy chemical industry. A few years ago, there were some people who had no understanding at all of global economic development, claiming things like an excess of refining capacity, an excess of ethylene, and an excess of chemical raw materials in our country – completely naive statements from amateurs. One important reason why we lack pricing power in **many industries and products is that the volume and quality of the products we can control do not give us a dominant position. Only when the production scale of a product reaches a certain level, enabling it to capture a significant market share, and when the product range is comprehensive and the quality is excellent, will the power to make decisions naturally shift to China’s side. Introduction is aimed at development, and it is also an important step in building up or enhancing one’s own technical capabilities and product strengths. If **focus had been placed on major economic-driven projects 10 years earlier, it is estimated that we would already have a certain degree of influence now. Rather than letting such large amounts of foreign exchange reserves lose value, it is better to spend this money sooner on the upgrading of key technologies and products.
Well said – first seize the right to speak; once that right is obtained, the technical approach can be determined.
Posts spanning 11 years bear witness to the rapid development of China’s polypropylene industry! China’s polypropylene design teams and manufacturing enterprises have made great progress, which is truly praiseworthy!