Dangote Refinery’s Polypropylene Production Reshapes Domestic Market

Key Highlights:

1. PPCP and PPHP Prices in India – Prices vary by type, with Reliance PPCP at ₹104,500/MT and PPHP Lamination (MRPL) ranging from ₹101,000-₹104,500/MT.
2. Nigeria’s Market to Shift with Dangote’s 830,000 MT/Year Polypropylene Plant – Local production now exceeds domestic demand of 250,000 MT, reducing import dependence.
3. Industry Anticipates Oversupply and Price Adjustments – Increased competition could lead to lower prices, affecting global suppliers.
4. Expert Insights on Economic Impact – Experts predict job creation, tax revenue growth, and reduced forex outflows.

Indian Polypropylene Prices: Steady with Variations Across Categories

• PPCP (Random) prices are as follows: Reliance at ₹104,500/MT, Haldia at ₹102,000/MT, and IOCL at ₹103,000/MT. 
• PPHP prices vary by type—Lamination (MRPL) is priced at ₹101,000-₹104,500/MT, IM (MRPL) ranges from ₹98,500-₹100,000/MT.
• Raffia (MRPL) is between ₹97,000-₹99,500/MT, and TQ Film (MRPL) is listed at ₹99,000-₹101,000/MT.

Nigeria’s Polypropylene Market Faces Transformation with Dangote's Entry

• The Nigerian polypropylene market is set for a major shift as Dangote Refinery's polypropylene facility begins production, adding a substantial 830,000 metric tonnes per year to domestic supply. 
• Previously, the market relied heavily on imports from the Middle East and domestic production from Indorama Eleme’s Port Harcourt refinery. With Dangote's two polypropylene units (500,000 mt/year and 330,000 mt/year) now operational, Nigeria is poised to meet its annual domestic demand of 250,000 metric tonnes, significantly reducing reliance on imports.
• Market participants anticipate an oversupply situation, leading to intensified competition and potential price adjustments. Initial shipments, packaged in 25kg bags, have already started disrupting market dynamics. 
• Additionally, this new capacity is expected to encourage investments in downstream industries, enhancing local plastic packaging, textiles, and manufacturing sectors.
• While the refinery targets a full 650,000 barrels per day crude processing capacity, fluctuations in crude availability could impact polypropylene production consistency.

Market Dynamics: Oversupply Risks and Emerging Opportunities

• The Dangote Group has initiated the startup of its polypropylene facility in Lagos, marking one of the final commissioning milestones of its oil refining and petrochemical complex. 
• S&P Global reports that production has begun, with supplies already entering the market. The refinery's aggressive pricing strategies in Nigeria’s gasoline sector indicate that similar trends could emerge in the polypropylene segment, impacting traditional suppliers.
• Dangote's petrochemical plant, a $2 billion investment, is designed to manufacture 77 different high-performance grades of polypropylene. 
• The company aims to capture a significant share of the African market, leveraging its strategic location and integrated supply chain to compete with global suppliers.
• While no timeline has been set for full utilization, the facility is expected to boost Nigeria’s industrial output and reduce foreign exchange dependency on imports.

Expert Opinion: Economic Growth and Market Realignment Ahead

• According to Devakumar Edwin, Group Executive Director at Dangote Industries, the petrochemical plant will drive massive downstream investments and economic benefits, including job creation, increased tax revenue, and GDP growth. 
• The availability of locally produced polypropylene will encourage domestic manufacturing and reduce Nigeria’s foreign exchange outflows. Experts believe that the new capacity will force a market realignment, with potential price corrections and a shift in buyer preferences from imports to local supply.