Affected by multiple bearish factors, the polypropylene industry encountered a cyclical downturn in 2025, with corporate profitability facing widespread pressure.

Throughout 2025, domestic polypropylene prices trended downward with a continuously shifting downward center of gravity. Capacity expansion persisted throughout the year, driving corresponding output growth. On the demand side, domestic support proved insufficient while foreign demand growth slowed. For most of 2025, oil-based polypropylene production remained unprofitable, whereas coal-based polypropylene maintained positive gross margins. She anticipates that the supply-demand gap will widen further in 2026, potentially pushing polypropylene prices even lower.

Polypropylene is the second-largest general-purpose synthetic resin, widely used in automotive, home appliances, electronics, packaging, building materials, and furniture sectors.

In recent years, the polypropylene industry has undergone continuous capacity expansion, shifting from a tight supply-demand balance to a surplus. In 2025, new polypropylene capacity additions reached 4.555 million tons, pushing total capacity to 49.165 million tons and annual output past the 40-million-ton threshold.

From 2021 to 2025, China's polypropylene capacity is projected to grow at a compound annual growth rate (CAGR) of 11%, while production volume is expected to increase at approximately 8% CAGR. During this period, annual production volume will rise from 29.27 million tons to 40.22 million tons, representing a 37% increase. However, capacity utilization rates show a pronounced downward trend, declining from a peak of 91% to 82%.

In 2025, polypropylene market prices exhibited a continuous downward trend, with the price center shifting lower. The annual price peak occurred in early January at 7,510 RMB/ton, while the low point was reached in late December at 6,100 RMB/ton. The annual average price for polypropylene filament market stood at 6,988.23 RMB/ton, representing a year-on-year decline of 7.35%.

Oil-based polypropylene production remained unprofitable for most of 2025, though losses narrowed compared to the previous year. Crude oil prices trended downward throughout the year, with polypropylene price declines lagging behind the drop in oil-based production costs. This led to a partial recovery in oil-based polypropylene margins, with the annual average gross margin reaching -354.93 RMB/ton—a 55.18% improvement over the same period in 2024. Coal-based polypropylene demonstrated relatively stronger profitability in 2025. Influenced by domestic thermal coal prices that weakened initially before strengthening, the annual average gross profit reached 336.89 RMB/ton. Conversely, PDH-based polypropylene continued its loss-making trend, with an average gross profit of -899.15 RMB/ton in 2025—a decline of 322.97 RMB/ton (56.05%) compared to the previous year.

Looking ahead to 2026, the polypropylene market may see continued downward pressure on prices amid a “strong supply, weak demand” landscape. On the cost side, under macroeconomic expectations of gradual interest rate cuts and a soft economic landing, crude oil prices are projected to remain weak, offering limited support to the polypropylene market. However, low-cost operations will aid in restoring producer profits and boosting essential production capacity utilization. On the demand side, growth in traditional manufacturing demand is expected to slow, making emerging demand and overseas market expansion crucial avenues to alleviate domestic supply pressures.

In 2026, estimated polypropylene capacity and production are projected to grow in tandem, with capacity utilization rates declining further. Imports are expected to decrease, while exports and maintenance-related losses increase. China's total polypropylene supply in 2026 is projected to reach approximately 42.58 million tons, an increase of 2.36 million tons (6%) compared to 2025.

Facing persistent supply pressures and high costs, polypropylene producers should continue advancing product diversification, high-end development, and differentiation strategies to enhance overall competitiveness and resilience against cyclical fluctuations.

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