China’s Polypropylene Market: The Big Inland Growth Opportunities

Business, China, Company Strategy, Economics, Olefins, Polyolefins, US

By John Richardson

A CONVENTIONAL WAY to assess the pace of polymers demand growth in a developing country is to assume links with historical patterns in developing countries.

How long did it take the US, Western Europe and other developed economies to reach their current level of per capita consumption? From these rates of increase, it is possible to guesstimate how long, say, China will take to catch up.

In developed markets, per capita consumption has in the past also peaked and then declined on income growth levelling off, better grades of polymers that require less resins to achieve the same performances and more recycling etc. It is thus possible to look at these historical patterns to predict when this will occur in developing markets, and to work out pace at which consumption will decline in China etc.

Let’s use the US and China and polypropylene (PP) as examples. US per capita consumption grew from just 5.5 kilograms in 1978 to a peak of 21.6 in 1999, according to my calculations of the data in the ICIS Supply & Demand database. Since then, though, per capita consumption had edged down during most of the years until 2017. This left 2017 consumption at 19.6 kilograms.

Meanwhile, China has seen quite stunning growth, especially since 2001. Two pivotal events have driven PP and polymers consumption growth in general since then.

China joined the World Trade Organisation WTO) in 2001, resulting in the lifting of the quotas and tariffs that had restricted China’s exports to the West. Before 2001, China was already the low cost workshop of the world, but this role became even more established after WTO membership. Then came the post-Global Financial Crisis economic stimulus package that further turbocharged growth in polymers demand.

China has seen PP per capita consumption rise from just 4.3 kilograms in 2001 to 18.7 kilograms in 2017.  China therefore seems likely to reach the 1999 US peak of consumption very soon. Perhaps consumption growth will then begin to slow down and decline – assuming, that is, you want to draw a straight line between the development of these two economies.

And in terms of tonnes, China’s consumption is now often in excess of many developed markets.  Take PP again as an example. In 2001, Chinese demand was 5.4m tonnes compared with 8.6m tonnes in the US. We estimate that last year China consumed 26m tonnes versus 8m tonnes in the US.

Analysis needs to go much deeper than this

Whilst headline, nationwide numbers for China’s polymers consumption good start, they should not be the finishing point. We are thus working on assessments of polymer consumption levels across China’s different provinces and other administrative regions.

The above chart is my preliminary attempt at this type of analysis:

  • The latest available IMF data for per capita income levels by province and region in China is for 2016 – hence, my focus on this year.
  • Average income was at $8,216. In No1 spot was Beijing at $17,795 with Gansu in 32nd or last place at just $4,161.
  • It was thus a straightforward job to work out the multiple of the income of each of province and region over the 2016 average.
  • In 2016, we estimated that PP per capita consumption was at an average of 17.4 kilograms.
  • I then multiplied this 17.4 kilograms by how much each province and region’s income was above or below the national average income.
  • This left Beijing in first place at 38 kilograms of PP consumption per person and Gansu last at only 9 kilograms.

This, as I said, is just a preliminary attempt to show regional variations in consumption and so may well be wrong.

But the chart does tell us that the east coast provinces are close to or beyond maturity, at least in commodity grade of PP. Future success in these provinces might involve focusing higher-value grades of PP. But as you move further west, the potential for future growth in commodity grades increases.

The pace of consumption growth in these poorer provinces and regions will be determined by the effectiveness of government policy initiatives aimed at dealing with income inequality. This has become a top government priority as 500 million Chinese citizens – 36% of the population live on less than $5.50 a day, according to the World Bank. In 2016, 43.35 million people lived below Beijing’s poverty line.

Most things in China circle back to government policy and yet far too much analysis overlooks this critical areas.

And as I argued last week – using polyethylene as an example – any number of outcomes are possible in China’s polymers markets, with the pace of inland consumption growth just one of many variables.


Stock Markets: Real Implications For Petchems and Risks Of A "Cynical Bubble"


By John Richardson WHEN stock markets are rising, the proverbial garden can look...

Learn more

US Import Tariff Decision: Impact On Polyethylene And The Global Economy


By John Richardson THE PROSPECT of a US-China trade war has edged closer as a re...

Learn more
More posts
Sustainability, the pandemic, demographics and geopolitics – how petchem companies respond will define their success

Just to stress again that this blog represents my personal views and not those if ICIS. By John Rich...

Exporters of PP and SM to China seem to have options other than shutdowns, but not PX exporters

By John Richardson DIFFICULT choices lie ahead for exporters of polypropylene (PP), styrene monomer ...

China polyethylene and ethlyene glycols in 2021: country-by-country outlook for exporters

By John Richardson CHINA’S polyethylene (PE) imports could be at either 19.8m tonnes in 2021 or 16...

China’s PE imports in 2021 could be as high as 19.8m tonnes or as low as 16.8m tonnes

By John Richardson IN SCENARIO 3 in the above chart, China would import 16.8m tonnes of polyethylene...

China may next year import 66% less PP from South Korea than in 2020, 72% less styrene from Saudi Arabia

By John Richardson All the numbers that follow are my estimates only and are not the official ICIS n...

China’s planned economy boosts global petchems this year but poses a self-sufficiency threat in 2021

By John Richardson IT IS always useful to develop a good plan and then effectively implement the pla...

Why history, culture and politics will give you the petrochemicals answers you need

By John Richardson ALBERT EINSTEIN knew a thing or two about data, including searching for entirely ...

No change in China’s policies seem likely under a Biden and Harris White House

By John Richardson WE NEED to talk about politics without being political – a very difficult t...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more