Propylene Oxide Market in China

By Li Min, China National Chemical Economic and Technical Development Centre

Supply

By the end of 2015, China’s capacity to make propylene oxide reached 3 007kt/a, an increase of 2% over the previous year. The output was 2 091kt, after a YoY drop of 0.5%. There were 24 propylene oxide producers in China. Shandong was the biggest propylene oxide production province, with 1 632kt/a capacity, 54.3% of the national total. Table 1 shows the major propylene oxide producers in China in 2015.
Excessive capacity expansion has led to a sustained reduction of operating rates, so the growth of capacity will slow down. Table 2 shows the propylene oxide projects under construction in 2016 or planned for construction.

Table 1  Major propylene oxide producers in China, 2015

Producer    Region    Capacity (kt/a)    Process

Fujian MeizhouwanChlor-Alkali Industry Co., Ltd.    Fujian    50    Chlorohydrination
CNOOC Shell Petrochemical Co., Ltd.    Guangdong    290    PO/SM
HebeiHuichuan Light Chemical Co., Ltd.    Hebei    /    Chlorohydrination
Sinopec Changling Petrochemical Co., Ltd.    Hunan    100    HPPO
Jishen Chemical Industrial Co., Ltd.    Jilin    300    HPPO
Jiangsu GPRO Zhongshan Chemical Co., Ltd.    Jiangsu    /    Chlorohydrination
Nanjing KUMHO GPRO Chemical Co., Ltd.    Jiangsu    80    Chlorohydrination
Jinhua Group Chlor-Alkali Co., Ltd.    Liaoning    120    Chlorohydrination
Shenyang Jinbilan Chemical Co., Ltd.    Liaoning    /    Chlorohydrination
Shandong Binhua Group Co., Ltd.    Shandong    280    Chlorohydrination
Shandong BluestarDongda Chemical Co., Ltd.    Shandong    80    Chlorohydrination
Shanghai Gaoqiao Petrochemical Co., Ltd.    Shandong    /    Chlorohydrination
Shandong ShidaShenghua Chemical Co., Ltd.    Shandong    70    Chlorohydrination
Shandong WudiXinyue Chemical Co., Ltd.    Shandong    350    Chlorohydrination
Shandong Zibo Yongda Chemical Co., Ltd.    Shandong    50    Chlorohydrination
Shandong Dongchen Holding Group Co., Ltd.    Shandong    0    Chlorohydrination
Shandong Jinling Chemical Co., Ltd.    Shandong    160    Chlorohydrination
Shandong Sanyue Chemical Group Co., Ltd.    Shandong    160    Chlorohydrination
Shandong Zhonghai Chemical Group Co., Ltd.    Shandong    62    Chlorohydrination
DongyingHuatai Chemical Group Co., Ltd.    Shandong    80    Chlorohydrination
Shandong Daze Chemical Co., Ltd.    Shandong    100    Chlorohydrination
Tianjin Dagu Fine Chemical Co., Ltd.    Tianjin    150    Chlorohydrination
Ningbo ZRCC Lyondell Chemical Co., Ltd.    Zhejiang    285    PO/SM
Wanhua Chemical Group Co., Ltd.    Shandong    240    Co-oxidation
Total     -    3 007    -


Table 2  Future new capacities for propylene oxide in China

Company    New capacity (kt/a)    Location    Year of starting production
Nanjing Jinling Huntsman New Material Co., Ltd.    240    Jiangsu    2016
Jiangsu Bluestar Green Technology Co., Ltd.    400    Jiangsu    2017
Jishen Chemical Industrial Co., Ltd.    600    Jiangsu    2018
Nanjing Hongbaoli Group Co., Ltd.    120    Jiangsu    2018
Total    1 360    -    -


Demand

The output of propylene oxide in China was 2 091kt in 2015, a drop of 0.5% from the previous year. The apparent consumption was 2 352kt, a drop of 8%. Self-sufficiency was 88.9%, up 6.8 percentage points. Pushed by demand, the apparent consumption of propylene oxide in China has increased rapidly in recent years. The consumption of propylene oxide, however, started to decline in 2015. Table 3 shows the details.
China consumed 2 352kt of propylene oxide in 2015 and 1 775kt in 2011. The composite annual growth rate (CAGR) of propylene oxide consumption in China during 2011-2015 was 4.9%.
Propylene oxide is used mainly to produce polyether polyol glycol (PPG), propylene glycol (PG) and propylene glycol ether (PM). The manufacture of PPG is the biggest use.
Around 1 870kt of propylene oxide was consumed in making PPG in 2015, accounting for around 79.7% of the total. China’s PG capacity was over 700kt/a, and around 170kt of propylene oxide was consumed there. PM capacity was 500kt/a and around 150kt of propylene oxide was consumed there. Figure 1 shows the consumption pattern of propylene oxide in major application sectors in 2015.
The growth of demand for propylene oxide is promoted mainly by increasing consumption in making products such as PPG, PG and PM. It is expected that the apparent consumption of propylene oxide in China will reach 2 630kt in 2017.


Table 3  Apparent consumption of propylene oxide in China, 2013-2015  (kt)

Year    Output    Import volume    Export volume    Apparent consumption    Self-sufficiency (%)
2015    2 091     261     0.0     2 352     88.9
2014    2 100     457     0.0     2 557     82.1
2013    1 930     445     1.0     2 374     81.3


Table 4  China’s foreign trade in propylene oxide, 2013-2015

Year    Import    Export volume (kt)
    Volume
(kt)    YoY growth (%)    Value
(US$ million)    Growth
(%)    
2015    261     -42.9     388.11     -53.9     --
2014    457    2.7     841.04    15.1     0.2
2013    445    -13.6    730.61    - 11.2    1.3

Import and export

China is a net importer of propylene oxide. Its import dependence was 11.1% in 2015. The import volume was 261kt in 2015, a drop of 42.9% from the previous year. The import value was US$388.11 million, a drop of 53.9%. Table 4 shows import and export of propylene oxide by China in recent years.
In 2015, China imported propylene oxide mainly from Thailand, Saudi Arabia and Japan. The volume imported from Thailand was 119kt, accounting for 45.9% of the total. The volume imported from Saudi Arabia was 94kt, accounting for 36.3%. The volume imported from Japan was 19kt, accounting for 7.5%. The province with the biggest import volume in 2015 was Jiangsu, taking 205kt, and accounting for 78.6% of the national total. Zhejiang was the second, importing 41kt, or 16%, and Shandong was third place, importing 9.517kt, or 3.6%. The customs handling the biggest import volume in 2015 was Nanjing Customs, and the volume there was 205kt, accounting for 78.6% of the national total. Ningbo Customs held second place, and Qingdao Customs was third.
China exports very little propylene oxide, only 371 tons in 2015.

Market price

The propylene oxide market in China fluctuated violently in 2015,with prices declining overall. Take the prices in East China for instance. The prices increased steadily in the first quarter, in the range RMB10 850-12 800/t. Prices started to drop in mid-April. Despite some short-lived recoveries, the declining trend lasted. The lowest price of the year, RMB8 100/t, appeared at the end of December. The average price in the whole year was RMB10 548/t. Figure 2 shows the price trend of propylene oxide in East China in 2015.