Propylene is a colourless, flammable, non-toxic gas produced by the dehydrogenation of propane. It is second largest chemical produced globally in terms of volume. The global propylene consumption is estimated to continue to witness steady growth during 2022-2032, primarily driven by strong demand from Asia Pacific.
Propylene is widely used as to produce polypropylene, Propylene Oxide, Acrylonitrile, Oxo-alcohols, Cumene, Acrylic Acid and other products. Polypropylene is the dominant consumer of propylene, accounting for more than half of global propylene demand in 2021. The global polypropylene demand was estimated to be around 80,000 kilo tons which is projected to cross 95,000 kilo tons in the coming years. Asia-Pacific is currently the largest polypropylene market, followed by North America and Europe. The polypropylene market in Asia-Pacific is being driven by the growing demand from the packaging and automotive industries, as well as the increasing adoption of polypropylene in the construction industry. The polypropylene market in North America is being driven by the growing demand for polypropylene in the automotive and packaging industries.
Propylene oxide is the second-largest consumer of propylene, representing over 10% of global propylene demand in 2021. It is primarily utilized in the production of polyether polyols, accounting for more than 60% of global propylene oxide demand. Propylene oxide is combined with isocyanates to form polyurethanes, which find extensive applications in several industries. These include foams used in the furniture and automotive sectors, rigid foams for building insulation, as well as various non-foam uses like adhesives, coatings, sealants, and elastomers.
Asia Pacific is the largest market for Propylene with China dominating the regional market. The country accounts for more than 30% of the global Propylene market share. The region’s Propylene demand has been growing at a fast pace, driven by emerging economies like China and India. In the long-term forecast period, Asia Pacific is estimated to maintain its dominance and be a largest market for propylene. The Asia-Pacific propylene market is experiencing strong growth, driven by robust end-use industries, increasing demand for lightweight materials, petrochemical integration, and strong investment in R&D. As the region continues to evolve and industrialize, the propylene market is expected to witness further expansion and innovation.
Market Dynamics
Rising demand from various End-Use Industries
The propylene market has witnessed strong growth in last decade and it further projected to grow at a CAGR of 4% in the long-term forecast period due to the fast-rising demand of polypropylene and propylene glycol from the automotive, and construction industry. In 2021, the global Polypropylene capacity stood at 98,000 kilo tons which is estimated to cross 107,000 kilo tons in next five years. Polypropylene is widely used in the manufacture of bumpers, interior trim, instrument panels, battery boxes and trays, fender liners, door trims, and other machinery. Polypropylene is also widely used in the packaging industry because of its moisture barrier qualities, less food degradation, therefore offering efficient packaging solutions for Food & Beverage packaging.
•Sabic has introduced two short-glass-fiber-reinforced polypropylene compounds offering improved performance and processing for under-hood, exterior, and interior applications in the automotive industry.
•In December 2022, ExxonMobil doubled their production capacity for Polypropylene at their Baton Rouge plant owing to the robust use of Polypropylene in various End-Use industries.
Sustainable approach
The emphasis on sustainability has had a growing impact on the Propylene industry. Efforts are made to develop renewable and bio-based propylene production methods to reduce its reliance on fossil fuels. This involves using bio-based processes such as fermentation, enzymatic conversion, or thermochemical conversion to convert biomass into propylene. Bio-based propylene has the advantage of being derived from renewable resources and has the potential to significantly reduce greenhouse gas emissions compared to traditional methods.
•In April 2023, LG Chem announced a Joint Development Agreement with Gevo Inc., to develop bio-based Propylene which will target for 90% less carbon emissions.
•Borealis and Neste have started the production of Bio-Polypropylene production by the end of 2019.
Fluctuating Crude Oil prices
Propylene is produced from the thermal cracking of hydrocarbons or as a by-product of petroleum refining. Fluctuations in crude oil prices can significantly impact the manufacturing cost of propylene. The price fluctuations in the propylene market are primarily influenced by significant volatility in the oil and gas industry. The decrease in crude oil consumption caused by COVID-19 has resulted in remarkable changes in crude oil prices, which are expected to subsequently affect propylene prices. Additionally, the reduction in operating rates across multiple plants have also contributing to the fluctuations in propylene prices. Consequently, these price fluctuations in the propylene market can impact the anticipated growth in demand during the forecast period.
Recent Development for Propylene
In May 2023, Alujain National Industrial Co. has chosen C3 CATOFIN® PDH technology from Lummus Technology for an upcoming propylene plant in Saudi Arabia. Once operational, the plant will have a propylene production capacity of 600 kilo tons per year, which will be used as feedstock for Alujain s new downstream polypropylene (PP) production.
LyondellBasell Industries is planning to expand its propylene capacity by 400 kilo tons at its Channelview plant in Texas. The proposed expansion will involve utilizing LyondellBasell s existing technology to convert ethylene into propylene. While the final investment decision has not been confirmed yet, if approved and completed, this expansion would result in a 35% increase in LyondellBasell s propylene capacity at the Channelview facility.
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