Propylene Oxide

Propylene Oxide Global Market Outlook

• The global Propylene oxide market is expected to grow at a CAGR of 5.2 percent during 2021–2025. The impetus for this growth comes from demand in Asia, which is expected to grow at 6-7 percent, due to anticipated growth in Polyether, Propylene glycol segments

• Polyether demand is expected to be driven by the construction and automobile segment (5–6 percent CAGR) and Propylene glycol to be driven by construction (3–4 percent CAGR) for the next 4–5 years

Global Market Size: Propylene oxide

• In 2020 Propylene oxide market  was affected due to COVID-19 lockdown and environmental safety protocols in China. The lockdown resulted in plant shutdowns across various industries globally. Construction sector being the major consumer of Propylene oxide also had a negative impact

• The increasing demand for the polyether polyols used in productions of polyurethane which is consumed majorly by automobile and construction industry is expected to drive the PO market`

Propylene Oxide : Industry Drivers and Constraints

Drivers

Demand from Various Segments

• The high downstream demand from polyether polyols and propylene glycols are used in homecare, construction and automobile industries  is expected to be the major driver for PO.

Market Transparency at Every Node of Value Chain

• Across the major Propylene Oxide value chains, price discovery is done for every commodity, due to high maturity and transparency of the market. End users have opportunity to be aware in accessing the cost pass-on across value chains, making it easy for buyers to achieve cost effective procurement

Crude Prices

• Crude oil prices are the lead indicator along the propylene oxide value chain as any significant increase or decrease in crude prices will subsequently have a similar effect on PO prices.

Constraints

Coronavirus Outbreak

• Coronavirus Outbreak has impacted the major demand segments of Propylene Oxide to a great extent i.e. Construction and Automobile segment. Thereby, the demand is forecasted to grow at lower rate than previous forecast.

Toxic Nature

• Propylene oxide is known to cause health issues on long exposure including eye and skin irritation and necrosis. This has become a growing concern and its been classified as a potential carcinogen by the Environmental Protection Agency.

Environmental Policies

• China’s dual policy (towards energy conservation), implemented in late 2021, had impacted the supply of propylene oxide significantly as production units in China were forced to limit their production , eventually affecting the PO value chain globally.

Propylene Oxide Cost Structure Analysis

Due to the recent downtrend in energy prices in china both coal and electricity rates have decreased. This has lead to cost-effective production of propylene oxide. Western Europe has the highest cost of production because of their natural gas prices.

• Raw material cost constitutes more than 80 percent of the overall cost of production for producing Propylene Oxide.

• PO prices are tagged to its primary feedstock, propylene

• The Europe and USA  Propylene oxide prices settle in accordance with the Propylene prices.

• The Labor and electricity costs in Europe are higher in comparison to other regions owing to shift for renewable sources of energy