Polypropylene's (PP) intrinsic properties of high stiffness, good tensile strength and inertness toward acids, alkalis and solvents, plus its traditional cost advantage over other thermoplastic polymers, has secured its position in a wide range of consumer and industrial products, manufactured by several high-volume forming methods. In addition, its low density and cost advantage over other thermoplastic polymers make it suitable for applications that are weight and cost conscious.
There are three forms of PP that can be produced – isotactic, syndiotactic and atactic – but isotatic PP is the main form manufactured. Small amounts of other monomers (most usually ethylene) can be added to make either random or block PP copolymers.
Injection moulding applications are the largest outlet for PP. Uses here include packaging, parts for electronic and electrical appliances, caps and closures, toys, luggage and a variety of household goods and miscellaneous products.
The second largest outlet for PP is the fibres sector. A growth market has been carpet face yarn for carpet backing while its combined strength and resistance has led to the replacement of sisal and jute in ropes, twine and string. It can also be used in textiles such as thermal underwear and plays an important part in the non-woven market. Globally, fibre markets are seeing steady growth although there is a migration away from North America and western Europe to northeast Asia.
Both the film and sheet markets have seen good growth over recent years, particularly sheet for thermoforming applications. Film grade PP offers excellent optical clarity and low moisture vapour transmission with uses in the packaging of sweets, snack foods and cigarettes, capacitors and other electronic films, photo and graphic arts applications, and pressure sensitive tape backing and labels. PP sheet is used in thermoformed food containers, which can be blow or injection moulded.
The blow moulding market continues to grow from a very small base. PP has also seen some growth as an extrusion coating in a market dominated by low density polyethylene (LDPE). Atactic polypropylene finds outlets in paper laminating, sealants and adhesives. There is also some growth in extrusion of pipe and conduit, wire and cable. 
PP and its alloys have become the plastic of choice in the automobile market where it can provide substantial weight savings. It is used in internal and external body panels and its heat resistance makes it suitable for use for components in the engine compartment. PP's low density, combined with good mechanical properties (especially when filled or compounded) and good injection moulding characteristics, make it very suitable for the large-volume, weight-conscious automotive market. Over a third of plastics in automobiles are now PP and PP alloys.
The thermoplastic has a wide range of melt flows which has led to significant growth through product substitution of many plastics. Examples include the displacement of polystyrene (PS) in sheet extrusion, nylon in carpet face yarns, acrylonitrile butadiene styrene (ABS) in appliances, flexible polyvinyl chloride (PVC) in film and medical applications, high density polyethylene (HDPE) in stadium cups and yoghurt containers, polyethylene terephthalate (PET) in microwave trays and water bottles, and polycarbonate in housings and automobile parts. PP has also substituted non-plastic materials such as metal and glass.
Global growth slowing
Historically, PP has seen above average global growth rates of the order of 7-8%/year due to its versatility and relatively low cost position versus other polymers. This has resulted in increased demand for its feedstock, propylene.
However, two challenges have emerged in the propylene market. First, propylene demand has been increasing faster than supply resulting in the need for more expensive on-purpose technologies to supplement its production. The result is that propylene prices have increased relative to ethylene prices, taking away its previous price advantage. On top of this, propylene prices are tied to oil prices which have risen considerably, pulling propylene with them. The overall impact is that PP prices have also risen to new heights.
As a result, PP has been losing its competitive price position to other polymers. According to US-based consultants CMAI, while PP prices still remain below parity with some of the other commodity polymers, the continuation of this trend may translate into lower than historic demand growth rates in the future.
Nevertheless, CMAI still expects strong growth for PP predicting global rates of just under 6%/year in the 2007-2012 period. However, less of the growth will come from the substitution other polymers and more from increased demand in developing regions such as China and India. CMAI estimated global PP demand at 44m tonnes in 2007.
There is concern over the huge amount of new capacity that is expected to hit the PP industry with 9m tonnes/year being added in the 2008-2010 period. There is a concentration of new projects in the Middle East and Asia but there will also be new capacity in India, Europe and America.
The intensity of the project start-ups has commenced with 2.4m tonnes/year commissioned during the first quarter of 2008, according to CMAI. An even larger amount of 2.7m tonnes/year is expected to start up in Q4 2008.
As the excess capacity builds up, a fierce battle is expected to take place for the export markets. North America is expected to lose its leadership position in the export markets while Europe could become a net importer.
As producers with uncompetitive costs will have difficulty maintaining their export positions, this will put pressure on their domestic markets as this material has to find a new home. This is more likely to drive down profitability in regions such as North America and West Europe rather than cheap imports.
Producers in these regions should also be ready to shut unprofitable operations. According to CMAI, about 200,000 tonnes/year of PP capacity was shut in 2007 in West Europe and North America. In 2008, almost 1m tonnes/year are expected to come offline with the trend expected to continue in following years.
Europe recovery falters
In Europe, demand recovered in 2006 and 2007 following a disappointing year in 2005. However, demand in 2008 was likely to be poor.
According to the association of plastics manufacturers, Plastics Europe, PP demand in the EU 15, Norway, Switzerland, Malta and Cyprus fell from 8.0m tonnes in 2004 to 7.90m tonnes in 2005 before recovering to 8.10m tonnes in 2006. Production has been growing from 8.97m tonnes in 2004 to 9.14m tonnes in 2005 and 9.26m tonnes in 2006.
Future demand is expected to grow at 4%/year in western Europe and the region is expected to become a net importer by 2009. Central and East European markets are expected to grow faster at 5-7%/year. The build-up of new capacity in the Middle East is expected to start impacting Europe in 2008.
Older capacity in western Europe is being replaced with modern process plants. Netherlands-based LyondellBasell and UK-headquartered INEOS Polyolefins shut plants in mid-2007 at Pernis, the Netherlands, and Geel, Belgium, respectively, removing 440,000 tonnes/year of capacity.
INEOS will close more capacity in Norway and France by the end of 2008 and the end of 2009, respectively, but is raising output in Geel, Belgium, by 220,000 tonnes/year in 2009. Output was also debottlenecked in Grangemouth, UK, by 50,000 tonnes/year and in Lavera, France, by 10,000 tonnes/year. Austrian-headquartered Borealis started up a 330,000 tonne/year unit in Burghausen, Germany, in late 2007.
North American exports to decline
In the US, all PP application areas are forecast to grow from 3.5%/year to 6.5%/year giving an aggregate growth rate of 4.5%/year to 2009, according to ICIS Chemical Business (ICB). Demand will grow from 7.62m tonnes in 2005 to 9.07m tonnes in 2009.
The US is a major exporter with exports reaching 2.0m tonnes in 2007, up 28% over 2006’s figure of 1.56m tonnes. However, it is likely that this position will disappear by the end of the decade due to the new capacity coming on-stream in the Middle East and Asia.
In addition, the US faces challenges in the supply and price of propylene feedstock. Around half of the propylene used in petrochemicals in the US comes from fluid catalytic cracking (FCC) units which produce gasoline in refineries. However, propylene demand is growing faster than gasoline and so refineries may be unable to keep up with demand. In addition, as crude oil prices increase, the alkylation value of propylene increases and at some point it may become more attractive for the refinery operators to use the propylene to make alkylate for gasoline rather than petrochemicals.
China demand soars
The largest consuming country of PP is China where future demand is expected to grow strongly. Apparent consumption in 2006 reached 8.76m tonnes while production was 5.84m tonnes and imports accounted for 2.94m tonnes. The China Petroleum and Chemical Industry Association estimates a 21% increase in PP output to 7.13m tonnes in 2007. By 2010, output could reach 10.7m tonnes while demand could increase to 12m tonnes.
There are at least 11 new PP plants with a total capacity of 3.9m tonnes/year under construction in China and due to come on-stream in 2008-2011 period, according to ICIS Plants & Projects. Two of these plants are based on propylene made from coal. Several further projects are in the study or approval stages. This is likely to lead to a more balanced supply and demand scenario, pushing out imports.
(Updated: July 2008. Sources: ICB Chemical Profiles, 14 July 2008 and 14 August 2006; CMAI 2008 World Petrochemical Conference, 26-27 March 2008, Houston, Texas.)