The Urethane Blog

Chinese Propylene Oxide Overview

 My Echemi 
Propylene oxide (PO) is the third largest propylene derivative after polypropylene and acrylonitrile. It can be made into polyurethane foam, it can also be made into fourth-generation detergent non-ionic surfactant, oil field demulsifier, pesticide emulsifier, etc. Derivatives of propylene oxide are widely used in furniture, home appliances, automobiles, construction, coatings and other industries.
The production process of propylene oxide is mainly divided into direct oxidation method (HPPO), co-oxidation method (PO/SM or PO/TBA-MTBE) and chlorohydrin method (CHPO). The chlorohydrin process technology is relatively mature, the production process is relatively safe, and the investment required is small. With the relevant guidance documents promulgated by the government in 2011 and the state’s goal of “carbon peaking” and “carbon neutrality”, various administrative regions have implemented “dual control” measures. Under the overall environmental protection policy, the propylene oxide chlorohydrin method will generate more “three wastes”, and the cost of environmental protection treatment will be higher in the later stage. It is expected that with the continuous development of the industry, the co-oxidation method and the direct oxidation method will continue to improve.
  Propylene oxide is a derivative of propylene. Its upstream raw materials are propylene and naphtha and propane required for the production of propylene. The main downstream products are polyether polyol, propylene glycol methyl ether, dimethyl carbonate, propylene glycol ether, etc.
Since March 2020, the prices of propane and naphtha (hydrogenation) in my country have shown a continuous growth trend, mainly due to the rise in crude oil prices and the accumulation of demand for enterprises to resume work and production after the epidemic. On the whole, since 2020, upstream raw materials The increase in part led to the increase in the price of propylene oxide.
The main products downstream of propylene oxide are polyether polyol, propylene glycol methyl ether, dimethyl carbonate, propylene glycol ether, etc. Polyether polyol is the largest downstream of propylene oxide, accounting for about 77.2% of the demand for propylene oxide. It is mainly used in the production of polyurethane foam. Its terminal downstream mainly includes white goods, building materials (mainly coatings), furniture and automobiles. In addition, the downstream product DMC (dimethyl carbonate), as the main lithium battery electrolyte solvent (transesterification method), benefits from the continuous growth of downstream new energy vehicle demand, and is expected to become a key demand growth point for propylene oxide.
In 2021, as the domestic production capacity continues to be put into operation, the production capacity of propylene oxide in China continues to grow. In addition, the industry maintains a high degree of prosperity in the first half of the year, and the overall output rises significantly. Throughout the year, the output still increased by more than 30%. According to data, my country’s propylene oxide output in 2021 will be 3.46 million tons, a new high in recent years. 2023 is expected to be the year with the most new capacity additions, reaching 2.78 million tons. In the future, with the release of new production capacity, the supply of propylene oxide in my country will be able to meet the continuously growing demand, the import dependence is expected to decrease, and the supply and demand of propylene oxide market will tend to be relaxed.
Future global market opportunities for propylene oxide in China
In 2020, the Ministry of Commerce opened restrictions on the export of ECH for direct oxidation and co-oxidation processes; Weak domestic demand coupled with the expansion of production capacity, by the end of 2022, a total of nearly 2.5 million tons of new production capacity will be started. The import volume of propane will be reduced to less than 100,000 tons, and there will be an obvious turning point in the import and export next year)
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