Looking at the timing of new production capacity added in 2026, there will be limited supply in the first half of the year, with most of it concentrated in the second half. Coupled with the expected spring maintenance in the first half of the year, the support from the supply side in the first half of the year may be more obvious. However, there will be a lot of new production capacity added in the second half of the year, which will have a significant impact on the supply side.

In recent years, the domestic propylene production capacity has expanded significantly, and the supply has increased year by year. And in the next 5 years, there is still an expected production of domestic PP. According to the data research of Zhongchuang Information, it is expected that there will still be more than 20 million tons of new production capacity in domestic PP in the next 5 years, especially in 2026, the new production capacity is expected to be significant, which will help the domestic production capacity to break through 50 million tons, and the supply side will be under obvious pressure.

Production capacity continues to expand, and the volume of supply has increased significantly.

In the next five years, PP is still in the period of capacity expansion, and the capacity is growing at a relatively fast speed. According to the research on the new investment equipment in the next five years by Zhongchuang Information, it is expected that the new investment capacity of domestic PP in the next five years will reach 23.145 million tons, with an average growth rate of 8.19%, which is 3.02 percentage points lower than the previous five years. Among them, it is expected that the new capacity of domestic PP will reach 5.65 million tons in 2026, at which time the domestic capacity will exceed 50 million tons, and the supply pressure from domestic production will increase significantly.

2026 new capacity continues to be deployed

Domestic PP capacity continues to grow from 2026 to 2030, domestic supply becomes more sufficient, and it also further promotes the improvement of PP self-sufficiency rate, and the replacement of imported sources is constantly increasing. According to the sorting and research verification of public information, the planned new capacity in 2026 is 5.65 million tons, which is slightly more than the expansion in 2026, and the capacity is expected to reach 53.875 million tons, with an expected capacity growth rate of 11.72%. However, considering the actual progress of new equipment commissioning, it is expected that some capacity will be postponed after the commissioning. In addition, some equipment is still in the planning period or public notice period, and there may be some uncertainty in the commissioning progress, which may be postponed or adjusted.

In terms of raw material sources, the new capacity invested in 2026 will continue to focus on oil and propane as raw materials, while the new capacity based on coal as raw material will also see a new wave of concentrated investment, further increasing its market share. In terms of the nature of the enterprise, although China National Petroleum Corporation (CNPC) and Sinopec have expectations for new capacity investment, the proportion is relatively small. Local refining enterprises and local light hydrocarbon enterprises are still the main force in new capacity investment, and the competition between enterprises is more fierce. In terms of the regional layout of new capacity, it is still concentrated in the three provinces of North China, East China and South China, but there is a clear upward trend in the new capacity in the Northwest region in recent years, and the competition in the region is further intensified.

Looking at the commissioning time of new production capacity from 2026, there will be limited supply in the first half of the year, with most of it concentrated in the second half. Coupled with the expected spring maintenance in the first half of the year, the support from the supply side in the first half of the year may be more obvious. However, there will be a lot of new production capacity put into operation in the second half of the year, which will have a significant impact on the supply side. And some of the new production capacity is scheduled to be put into operation at the end of the year, which has limited impact on the supply side of the year.

Overall, the expansion of PP production capacity continues, and the increased supply pressure from the 2026 capacity will be obvious. While increasing the competition in the market, it also makes the supply-side increment obvious, which has also become an important influencing factor for the low price of PP in 2026.