Polypropylene Film: Dual Growth in Quantity & Quality
The period from 2019 to 2024 marks a significant phase for China’s polypropylene (PP) film industry, characterized by rapid capacity expansion and a growing diversity of applications. By 2024, the annual production capacity of polypropylene in China is projected to reach approximately 46.76 million tons. The production of specialized materials for polypropylene films, including those designed for spinning and thin film applications, is also on the rise. The history of polypropylene film in China can be traced back to the 1960s, and the country has since emerged as a global leader in various categories of polypropylene film. This expansion is driven not only by market demand but also by governmental policies advocating for new energy solutions and environmental sustainability. As the need for capacitive films, lithium battery separators, and composite current collectors grows, firms are investing in independent research and development to overcome existing technological monopolies, thus regaining competitive advantage against foreign entities.
The growth trend of the polypropylene film industry from 2020 through 2024 demonstrates an ongoing upward trajectory. Starting in 2023, the supply of these films has increasingly outstripped demand, leading to fluctuations in market prices across various film products. Following a decline in raw material costs, some production facilities have slowed their operations, and the pace of capacity expansion has not met initial expectations. With an analysis of the supply-demand relationship, it becomes evident that earlier stages of rapid growth have resulted in an oversupply situation for polypropylene films during this time frame. When production capabilities are increased, but downstream demand remains relatively stagnant, a surplus emerges, leading to a decline in film prices across the board by 2024.
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The period from 2020 to 2024 is also notable for significant advancements in the downstream sectors utilizing polypropylene films, such as the pharmaceutical and new energy industries. Amid a public health crisis, the demand for pharmaceutical products saw a substantial increase. Concurrently, under the banner of green, sustainable practices, sectors like electric vehicles and energy storage moved forward swiftly during this period, driving innovations and boosting the market.
Between 2020 and 2024, the production of biaxially oriented polypropylene (BOPP) films is expected to rise by approximately 13.84%. The operational rates of manufacturing facilities have gradually improved from 52% to 63%. Most of the newly established BOPP production units are operating at full capacity, positively affecting the overall operational rates within the industry. Analyzing the data from this five-year span, 2021 stands out with remarkable growth in both production output and operational rates largely attributed to favorable market trends that year. Strong demand created a robust inventory replenishment mentality among downstream consumers, leading to high-utilization rates at BOPP facilities for most of the year.
In contrast, there are pressures from rapidly increasing capacity coming online that are making it difficult for supply and demand to stay aligned. From 2023 to 2024, operational rates within the BOPP sector are projected to stabilize at reasonable levels, despite production continuing to increase. Parallel to this, the production of cast polypropylene (CPP) films has seen an 18.97% increase in total output during the same timeframe, with operational rates fluctuating between 55% and 56.5%. As several new CPP facilities are brought online, the industry is facing a scenario of growing supply coinciding with a declining demand trajectory, prompting many firms to curtail operational loads in order to stave off excessive inventory accumulation and the consequential drop in market prices.
By 2024, while the growth of current capacity is expected to slow, an underlying imbalance between supply and demand is likely to persist. The industry may continue to experience interruptions in production workloads, leading to cautious stock management strategies as manufacturers navigate potential downturns in demand. Despite the potential stagnation projected for 2024, the total outgoing shipment volume for lithium battery separators has increased dramatically, with a 437.63% uptick in total shipments, an impressive 382.08% of which is from dry-method production lines.
The rapid investments in lithium battery separator manufacturing between 2020 and 2024 align with the shift in production and research trends across the manufacturing landscape. As lithium batteries are integral to modern technology, the demand for separator materials has soared, thereby laying the groundwork for subsequent industry growth. Between 2020 and 2022, the output from dry-method battery separators initially decreased but stabilized, mainly due to technological advancements and shifts in market demand caused by excess capacity and reduced operational rates.
This transition has ushered in a stronger market presence for wet-method separators, which offer superior performance, gradually establishing dominance in the mainstream market. As the competition among manufacturers intensifies, largely due to increased capacity entering the market, the shipment volume of dry-method separators has been impacted. The year 2023 saw a resurgence for dry-method separators as they captured a larger share of total shipments, supported by a rise in demand for lithium iron phosphate batteries and advancements in energy storage technologies.
The downstream industries are also pivoting towards high-end film products, propelled by evolving market demands. As film production capacity increases, the innovation of products tailored to meet elevated standards in packaging, electronics, and new energy sectors is becoming essential. Between 2020 and 2024, China’s production of new energy vehicles has surged at an impressive average growth rate of 23.13%, expected to yield approximately 8.316 million new energy vehicles by late 2024, accounting for 38.75% of total automobile production in the country.
In energy storage, the early momentum seen in lithium battery shipments is beginning to stabilize, yet the sector maintains a robust growth rate—averaging over 16.5% annually during the period. This consistent demand for lithium batteries has positioned companies like Xingyuan Materials and Enjie Co., Ltd. at the forefront of innovation, securing numerous patents related to lithium battery separator technologies that enhance efficiency and safety in production processes.
While BOPP and CPP materials are primarily associated with the packaging industry, the spotlight is increasingly being cast on high-end products as emerging directions for future growth. Within the BOPP family, capacitive films, though small in proportion, play vital roles in high-end applications across sectors like electronics and renewable energy. Additionally, adhesive-free films, although produced by fewer manufacturers, offer significant advantages over standard films and their future demand is set to rise.
CPP also enjoys applications in electronics and new energy sectors. The CPP aluminum-plastic film serves as a packaging material crucial to lithium batteries, thereby playing an indispensable role in the rapidly evolving landscape of the new energy sector. As the market for replacement batteries in electric vehicles and the demand for solid-state and semi-solid-state batteries grow, the high-end products within the CPP industry are also anticipated to flourish.