Major propylene derivatives include polypropylene, acrylonitrile, propylene oxide, cumene/phenol, oxo alcohols, acrylic acid, isopropyl alcohol, oligomers, and other miscellaneous intermediates that are used in a wide range of end-use applications including automotive, construction, consumer goods, packaging, and electronics.
Furthermore, the rapid development of ethane-based ethylene production in the Middle East and the switch to lighter steam cracker feedstock in the United States have been partly responsible for the shortfall in the supply of propylene and C4s. Nevertheless, the tightness could be relieved in the longer term, following the new development of on-purpose propylene production in China.
In 2016, Germany imported 738 Kiloton of propylene which further increased to 814 Kiloton in 2017 and further to 854 Kiloton in 2018. However, in 2020, imports dropped to 700 Kiloton due to the COVID-19 pandemic and economic slowdown. Despite the decrease in 2020, 2021 witnessed a significant increase in propylene imports, with 783 Kiloton imported in January 2021, and the average import price stood at USD 1142.
South Korea emerges as the largest exporter of propylene, with a total export volume of 1653 Kiloton and an average export price of USD 1014. Taiwan follows as the second-largest exporter, with exports reaching 604 Kiloton and average export prices at USD 1035 in 2021. The United States of America takes the third spot, exporting 440 Kiloton at an average price of USD 1460 in 2021.
The Asia Pacific region is the largest market for Propylene with a market share of XX% followed by Western Europe and XX. China and India are the key countries in Asia Pacific in terms of propylene capacity additions. China is expanding its capacity by 40% to cater to the rising demand. The main capacity addition in China will be from a planned project for Shandong Yulong Petrochemical Longkou Propylene Plant 1, with a capacity of 2300 Kiloton which is expected to commence production in 2024.
In India, Reliance Industries Jamnagar announced the plan for Propylene Plant 3 which will have a capacity of 1500 Kiloton and is expected to start by 2026. The global operating rates remained high in 2022, and the ongoing In Western Europe, the capacity has declined as a result of the closure of small steam crackers and a rising shift towards lighter cracker feedstocks.
Propylene consumption remained high at an estimated 4.7 % in 2017. Polypropylene is the main driver in the Propylene market, its market penetration continues to be aided by the low propylene prices as compared to ethylene. Propylene Oxide is the second largest derivative with a share of around 10%, the demand is increasing due to the rising demand for polyols which are further used to create polyurethanes for various applications such as furnishing to building insulation. Acrylonitrile and Isopropanol have relatively low growth while Cumene and Phenol sectors are still recovering.
Polypropylene is the largest derivative of Propylene with a market share of 62%. Polypropylene is commonly used in flexible and rigid packaging due to its superior qualities and low price. It is frequently used in the Automotive industry for bumpers, fender liners, interior trim, instrument panels, and door trims due to its inexpensive costs, exceptional mechanical properties, and moldability.
Acrylonitrile is also a derivative of propylene which is commonly used in polymers and elastomeric fibres. Acrylonitrile is used to produce sweaters, sportswear, socks, and home furnishing which contributes their maximum share in the market. It is also used in medical equipment such as pumps, valves, and mechanical seals. Owing to the global coronavirus pandemic, the demand for medical equipment will increase which will increase the demand for Acrylonitrile, positively impacting the Propylene market.
The demand for propylene is increasing in the automotive industry which is expected to drive the growth of propylene in the forecast period. Polypropylene is the largest derivative of Propylene which is commonly used in the Automotive industry.
In 2022, more than 85 million vehicles were manufactured around the world, an increase of more than 6% as compared to the previous year. China is the world’s largest manufacturer followed by the USA. China manufactured around 21 million cars and more than 4 million commercial vehicles in 2022, which combined for a total production of around 25 million vehicles. The boosting Automotive industry will positively impact the Propylene market as Polypropylene is commonly used to manufacture bumpers, interior trim, instrumental panels, battery cases, fender liners, trays, door trims, and other types of machinery.
The propylene market has witnessed strong growth in the last decade and it is 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 Kiloton which is estimated to cross 107,000 Kiloton in the 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 its Baton Rouge plant owing to the robust use of Polypropylene in various End-Use industries.
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 has also contributed 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.
Propylene gas is a byproduct of crude petroleum or a byproduct from the thermal cracking of hydrocarbons. Fluctuations in crude oil prices can impact the cost of manufacturing for Propylene.
The expansion of the Propylene market can be hindered owing to the availability of alternatives like polyethylene and polyethylene terephthalate, which have features comparable to PP.
In May 2023, Alujain National Industrial Co. chose 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 Kiloton per year, which will be used as feedstock for Alujain new downstream polypropylene (PP) production.
LyondellBasell Industries is planning to expand its propylene capacity by 400 Kiloton 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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