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Published: August 2011
During 2009–2010, world demand for polypropylene resins increased 6.8%. Despite the expected recovery of the economy and sustained growth across the regions, only few regions have shown strong growth: in North America domestic sales have increased by 9.2% while Europe has increased by 4.0% and Japan by 9.8%. Growth in 2010 in China on a preliminary basis was 5.7% based on the strong growth recorded in 2009 over 2008.
The United States and China now represent more than 12% and 26.6%, respectively, of world consumption for polypropylene, nearly three times the consumption of the next-largest consumers, Japan and Germany.
The following pie chart shows world consumption of polypropylene resins:
Polypropylene consumption patterns vary from region to region depending on the structure and balance of end uses in the industries in each region. In general, injection-molding applications tend to account for a major proportion of polypropylene consumption in industrialized countries, especially those with domestic automotive and appliance industries. In agricultural countries in early stages of industrial development, fiber applications dominate because of the demand for agricultural bags, sacks, tarpaulins and other exterior applications. Film markets are often the slowest to develop, reflecting the sophistication of packaging in existing domestic industrialized markets.
Durable goods such as motor vehicles, appliances and carpets account for about 50% of polypropylene end uses in the industrialized areas of the world. Consumption in these markets is the most dependent on economic cycles and consumer spending on hard goods. Packaging, another major market for polypropylene, is often considered recession-proof in comparison with other polypropylene end uses with regard to pull-through demand. However, inventory swings along packaging's substantial supply chain can play havoc with production demand, particularly during long down-market swings such as those experienced over 2000–2003 and again in 2008–2010. The packaging market has suffered the impact of legislation mandating an increasing use of recycled plastics, source reduction and the reduction of disposables.
Compared with other large-volume thermoplastics, the polypropylene business continues to exhibit excellent growth. Over the past ten years, world demand has grown annually by 4.8%. Since 2007–2008, massive capacity additions have forced older units to be rationalized, while the steep crude oil price increase has created some fundamental shifts in the light olefin markets, creating a long-term increase in the propylene-to-ethylene price ratio. Accordingly, polypropylene has become more expensive relative to polyethylene, promoting shifts from polypropylene to alternative products like HDPE, where possible.
During 2010–2015, world consumption of polypropylene is expected to grow at an average annual rate of approximately 5%. Growth will be fastest in China, Central and Eastern Europe, and Other Asia, as developing countries shift from a largely agrarian to an industrial economy, bringing growth opportunities for polypropylene to substitute for paper, metal, wood, glass and natural fibers. In China and Southeast Asia, consumption growth of polypropylene is significant because of its importance in film in the packaging of textiles and general consumer goods and the high usage of polyolefin fibers in production of agricultural bags and twine. Countries such as the Republic of Korea, Taiwan and China also have expanding automotive manufacturing industries that consume increasing volumes of polypropylene.
While new applications continue to be developed for polypropylene, it is still largely a commodity thermoplastic subject to economic fluctuations, especially in the area of durable goods. Producers continue to struggle with sustaining profitability, where cost volatility often undercuts the ability to recover pricing in tightly supplied markets. Competitors have consolidated, formed joint ventures and alliances in order to secure feedstock, and pursued broader commercial positions and/or technologies to streamline and hopefully reduce the profit volatility of their businesses.