India PP outlook for 2026: Oversupply entrenched as China flows and new capacity collide

India’s PP market is heading into 2026 under pronounced supply pressure, with oversupply firmly embedded after a turbulent 2025 marked by weak downstream demand, aggressive Chinese competition and a steadily depreciating rupee. While demand fundamentals remain structurally positive over the medium term, the near-term balance continues to favor sellers competing for market share rather than pricing power.

PP started 2025 on a relatively strong footing. Import prices for raffia and injection grades climbed to around $985/ton CIF India in February and March, supported by early-year restocking and expectations of infrastructure-led demand. However, momentum faded quickly as supply from China and the Middle East intensified, while demand from key sectors such as woven sacks, automotive and home appliances underperformed expectations.

By June, prices had slipped back and stabilized in a lower $920-950/ton range. The early arrival of the southwest monsoon further dampened sentiment, slowing construction and infrastructure activity and delaying consumption recovery. Traders reported rising inventories across ports and warehouses, reinforcing a defensive tone.

China’s export strategy gathers pace

A key factor shaping India’s PP market in 2025 was the acceleration of China’s PP export strategy, underpinned by a structural surplus. After adding several million tons of new PP capacity in recent years, China has moved decisively toward self-sufficiency while increasingly positioning itself as a net exporter. As domestic supply outpaced local demand growth, surplus volumes were steadily pushed into overseas markets.

At the same time, weaker conditions in China’s downstream manufacturing and consumer sectors further limited domestic PP consumption, reinforcing the export drive. While trade frictions affecting Chinese end products weighed on overall industrial activity, the resulting softness in resin demand left producers with little choice but to seek external outlets. In this context, higher PP exports in 2025 were largely inevitable rather than opportunistic.

India emerged as a natural destination within this strategy. Its large and diversified demand base, relatively open import channels and competitive logistics made it an attractive market for Chinese suppliers. Aggressively priced Chinese cargoes frequently undercut regional benchmarks, intensifying competition and constraining the pricing flexibility of domestic producers.

The impact became more pronounced in the second half of the year. By November, PP raffia import prices were hovering around $790-830/ton CIF India, reflecting persistent oversupply and muted buying interest. Although domestic producers attempted selective hikes, raising local raffia prices by INR500/ton in December to defend margins amid rupee weakness, ample inventories and competitively priced imports continued to cap any upside.

BIS cancellation reshapes 2026 outlook

The cancellation of India’s BIS certification requirement for polypropylene in November 2025 represents a structural shift for the PP market. Initially announced in early 2024 and repeatedly postponed, the BIS rule was ultimately scrapped for 14 chemicals, including polypropylene, removing a key non-tariff barrier to imports.

The move is widely seen as a significant positive development for Chinese exporters. According to ChemOrbis Supply Wizard data, China exported more than 2.8 million tons of PP during January-November 2025, up 28% year on year. Vietnam accounted for the largest share at 17%, while India ranked as the fifth-largest buyer with a 5% share, up from 4% and seventh place a year earlier.

From India’s perspective, the country imported slightly more than 1.5 million tons of PP during the first ten months of 2025, staging a remarkable increase of 20% from the same period of 2024. The United Arab Emirates was the largest supplier with a 29% share, followed by Singapore (23%), Saudi Arabia (16%), and China (8%).

With BIS hurdles removed, market players expect import flows to become smoother and potentially larger in 2026, particularly from China, further intensifying competition. India’s large population, expanding consumer base, and manufacturing ambitions continue to make it an attractive destination for Chinese exports. Yet for the domestic PP market, this also means heightened competition and thinner margins.

Domestic capacity wave adds to surplus

Supply pressure will be compounded by domestic capacity additions scheduled for 2026. According to ChemOrbis Supply Wizard, India is expected to add around 1.5 million tons/year of new PP capacity, assuming projects proceed as planned.
Key additions include:

• Indian Oil’s 450,000-ton PP plant at Panipat, expected to start up in March 2026


• Indian Oil’s 500,000-ton PP unit in Vadodara, targeted for mid-2026


• GAIL’s 500,000-ton PDH-PP project at Usar, expected in the second half of 2026


• GAIL’s 60,000-ton PP expansion at Pata, also slated for late 2026

These additions coincide with already lengthening regional supply, raising concerns that demand growth will struggle to keep pace.

Costs, currency and demand outlook

Upstream indicators offer little support. Brent crude hovered in the mid-$60s/bbl range through late 2025, while naphtha remained around $600/ton CFR Japan, limiting cost-push potential. Meanwhile, the rupee weakened to around INR91 per US dollar in December, from INR88 a year earlier, raising landed costs and financing expenses.

Looking into 2026, restocking and infrastructure spending in the first quarter may provide temporary support. However, without a stronger and more sustained pickup in downstream demand, India’s PP market is likely to remain oversupplied, with prices capped by domestic capacity growth and freer Chinese inflows.