By John Richardson
A PROMISED, here is the first of a series of posts following my 6 January post where I looked at the quite astonishing China-driven global oversupply in ethylene and propylene.
I detailed how China’s propylene capacity exceeding local demand was forecast by ICIS to reach 7.4m tonnes this year, a 179% over 2024.
China’s share of total global propylene capacity exceeding demand is expected to jump to 35% in 2025 over last year’s 26%. China first overtook Northeast ex-China (South Korea, Taiwan and Japan) as the biggest regional driver of propylene capacity exceeding demand in 2023.
Not surprisingly, as today’s post discusses, if we move downstream into the biggest propylene derivative – which is of course polypropylene (PP) – the story is the same.

Last year, ICIS estimated that China’s PP capacity exceeding its demand was 6.9m tonnes. This is expected to reach 11.6m tonnes in 2025, which would be an increase of 68%. As recently as 2009, China’s PP capacity was 4.4m tonnes short of local demand.
It was only in 2021 – the year of the Evergrande Turning Point and following China’s 2014 decision to push much harder towards chemicals and polymers self-sufficiency – that China moved into a slight surplus of 0.3m tonnes. The surplus jumped to 2.2m tonnes in 2022 as China’s long-term economic downturn began to take hold.
Now let us look at China’s percentage shares of total global PP capacity exceeding demand from 1992 onwards, when the Chemicals Supercycle began.

In 2009, China’s percentage share of total global PP capacity exceeding demand was minus 53%, reflecting its inability to keep up with soaring demand.
This had become a 3% surplus in 2022. Then in 2022, China overtook Northeast Asia ex-China (Japan, South Korea and Taiwan) which had been the world’s biggest regional driver of excess capacity. This year, China’s percentage share is expected to reach no less than 46%, ten percentage points higher than 2024, eclipsing all other regions which are expected to be in the single digits.
Sure, some projects might be delayed and production, based on demand, is different from capacify. But there must be enough steel already in the ground given the scheduled 6.4m tonnes year of capacity that’s due to come onstream in China this year – the biggest forecast annual increase on record – to guarantee another very difficult year for the global PP industry.
Protectionism, the New Year “market bounce” and margins data
Just how difficult will depend on these two things.
First is the strength of local demand growth. One Chinese economist suggests that last year’s real GDP growth was less than 2.5% rather than the official government estimate of 5%. China’s population may have been 130m lower in 2020 than the official government estimate, according to the ICIS economist Kevin Swift.
I don’t know if any of this is true, of course (nobody does). But build scenarios where the economy is under more strain than the official numbers suggest.
The lower the economic growth then of course the lower the demand growth for PP and other chemicals and polymers and the greater the overhang of China’s PP capacity versus local demand, further reducing China’s need for PP imports.
In January-November 2024, China’s exports of PP reached 2.2m tonnes versus 1.3m tonnes in 2024 and only 425,000 tonnes as recently as 2020. There is obviously the potential for exports to be even higher in 2025 in an environment of weak local demand growth and the capacity additions.
How much higher will depend on the levels of protectionism. PP producers elsewhere may well, I believe, seek more antidumping, safeguard and tariff protection.
We must also consider how the pace of China’s PP capacity and production growth will be affected by its ability to indirectly export PP as packaging for or components of finished goods.
Increased protectionism could again play a role here, in reaction to the belief that China as aggressively raised its exports of low, medium and high-value manufactured goods since 2021 in order to compensate for the collapse of the real-estate bubble.
All this might strike you as being at variance to talk of a New Year bounce, a recovery in China’s PP and other chemicals markets. If so, then you’re right.
The market bounce sentiment is hardly supported by the latest ICIS margins data for two routes to PP in Northeast Asia – the steam cracking of naphtha and dehydrogenation of propane (PDH plants. As you can, margins this year remain at record lows.

Take a deep breath, stand back from the market noise, think what the ICIS data is telling you and build scenarios to get through 2025.