China Inaugurates First Full-Portfolio Polypropylene Plant Amid Intense Industry Shake-Up

China National Petroleum Corporation (CNPC) has announced the successful start-up of a new 400,000-ton-per-year polypropylene facility at its Guangxi Petrochemical subsidiary, marking a significant milestone for the country's petrochemical sector.

The newly operational plant is China's first polypropylene facility capable of producing a complete product portfolio. This includes homopolymer, ethylene random copolymer, impact copolymer, and a butene-containing series, which comprises butene random copolymer and butene-ethylene terpolymer. With a capacity to manufacture over 200 distinct product grades, the facility is designed to meet highly specific market demand for differentiated, high-quality polypropylene materials, thereby supplying premium raw materials to a wide array of downstream industries.

This development comes at a critical juncture for the polypropylene industry, which is navigating a substantial capacity expansion cycle. Statistics indicate that approximately 26 million tons per year of new capacity remains slated for deployment globally, pushing major producers like PetroChina to increasingly adopt differentiated product strategies to secure a competitive edge.

Industry Under Pressure as Overcapacity Bites

The polypropylene sector is experiencing intense internal competition. In 2024 alone, China added 5.37 million tons per year of new capacity, bringing its total capacity to 51.36 million tons per year-an 11.7% year-on-year increase. Domestic production reached 37.92 million tons, a 6.6% rise from the previous year.

However, the market landscape is shifting dramatically. Imports fell to 3.67 million tons, down 10.8% year-on-year, while exports surged by 83.7% to 2.41 million tons. Consequently, China's import dependency dropped to a mere 3.2%. Amid this sustained capacity expansion, the average operating rate for polypropylene plants fell to a record low of 74% in 2024.

A significant challenge remains the product mix. In 2024, low-end filament-grade polypropylene still constituted over 30% of total output, while conventional homopolymer injection molding grade exceeded 10%. These segments, characterized by low technical barriers and concentrated capacity, are suffering from severe supply-demand imbalances. Over the past three years, the industry has accumulated 2.61 million tons per year of capacity in long-term shutdowns.

With a further 26 million tons per year of planned new capacity in China, the supply-demand conflict is intensifying, compelling companies with weaker product portfolios to face market elimination or forced transformation.

The Quest for Differentiation in a Crowded Market

In response, industry giants are pivoting towards premiumization and differentiation to secure a competitive advantage. Key target areas include:

• Metallocene Polypropylene (mPP): Valued for its superior impact strength, transparency, and low extractables, making it ideal for medical and high-end packaging.

• High Melt Flow Index Impact-Resistant Copolymer: Driven by automotive lightweighting, especially in new energy vehicles, which demand materials with low VOCs, high impact resistance, and light weight for battery packs and interior/exterior components.

• Specialty Healthcare Grades: Requiring high transparency, cleanliness, and resistance to gamma radiation sterilization to substitute imported materials for syringes and infusion bags.

Recent Breakthroughs in Differentiated Production

Several Chinese companies have recently announced advancements in this field:

• February 18: Guangzhou Petrochemical successfully trialled the production of metallocene polypropylene using catalysts independently developed by Sinopec. This was the first successful application of a domestic metallocene catalyst in a Mitsui-process plant.

• April: Tianjin Petrochemical completed the first industrial-scale production of its new polypropylene extrusion blow molding grade, PPR-BT03, noted for its high transparency and low-temperature drop resistance.

• July 2025: Guangdong Petrochemical's 500,000-ton-per-year polypropylene facility successfully produced the high-melt-strength fiber grade PP-HY0370, with performance indicators reaching internationally advanced levels.

• October 14: Yulin Petrochemical Company of Yanchang Petroleum Group produced EP200N, a new low-temperature resistant, high-impact copolymer polypropylene that maintains high toughness at -35°C.

• Separately, a new GX2026S polypropylene grade, developed by China Energy Group's Low-Carbon Research Institute and Xinjiang Chemical Industry, achieved continuous stable production for carpet yarn, capable of spinning at 2,600 meters per minute.

• Shijiazhuang Refining & Chemical has overcome technical barriers in large-scale production of polypropylene coating materials, achieving a cumulative output of 800 tons and establishing an annual production capacity of 10,000 tons.