By Zhang Qifei, Gong Yongqiang, Chemical Online

Several processes are employed, restructuring is accelerated

1. Coexistence of processes

   In the 1960s, all propylene oxide units in China employed the chlorohydrin process developed domestically. In the period from the end of the 1980s to the beginning of the 1990s, chlorohydrin process technology was introduced from Japan and the United States, and propylene oxide capacity in China increased greatly. In 2006, China introduced the PO/SM technology from Shell, constructing a 250 kt/a propylene oxide unit in Huizhou of Guangdong. In 2014, Jishen Chemical Industry Co., Ltd. introduced the HPPO process from Evonik of Germany and constructed the first 300 kt/a HPPO-process propylene oxide unit in China. A 100 kt/a propylene oxide unit constructed by Sinopec Changling Refining & Chemical Co., Ltd. using its own HPPO technology has also started production. In addition, Shandong Wanhua Chemical Group Co., Ltd. and Nanjing Jinling Huntsman New Material Co., Ltd. adopted the PO/TBA process to complete and put on stream two 240 kt/a propylene oxide units, one in 2015 and one in 2017. Table 1 shows the major propylene oxide producers and the capacities of their production units by the end of 2017.

Table 1   Major propylene oxide producers in China, 2017

2. High regional concentration of production

   China’s present propylene oxide capacity is 3.297 million t/a. It is distributed mainly in East China (66.3%), Northeast China (16.4%) and South China (9.7%). Shandong, hosting half of the national capacity, is the biggest producer. Guangdong and Jiangsu come next. With the gradual completion of new propylene oxide units using co-oxidation processes, the distribution of production will shift from Shandong toward Guangdong, Jiangsu, Zhejiang and Fujian.

3. Constant increase of output and start of import decline

   Both the output and the apparent consumption of propylene oxide in China have increased constantly in recent years. The average operating rate of production units is maintained above 80%, and the prosperity index of the sector has long been kept high. The import volume of propylene oxide increased constantly during 2008-2012 and peaked at 515 kt in 2012. In recent years, however, with the frequent completion of new units, the volume has started to decline. In 2017, in particular, only 233 kt was imported, and self-sufficiency exceeded 90%. Table 2 shows the output and the apparent consumption of propylene oxide in the past decade.

Table 2   Output & apparent consumption of propylene oxide in China, 2008-2017  (kt)

4. Gradual elimination of outdated capacity, priority of green development & environmental protection

   As the chlorohydrin process seriously corrodes equipment and emits a lot of pollutants, with greater attention paid to protecting the environment, it has become inevitable for some chlorohydrin-process propylene oxide units to be gradually eliminated from the market. At the beginning of 2011, the 20 kt/a unit of Zhejiang Pacific Chemical Co., Ltd., the 20 kt/a unit of Jiangxi Jiujiang Chemical Plant and the 80 kt/a unit of Sinopec Gaoqiao Petrochemical Co., Ltd. announced permanent closure. In 2013, chlorohydrin-process propylene oxide units with a combined capacity exceeding 100 kt/a were also forced to shut down due to environmental protection problems. The proportion of chlorohydrin-process propylene oxide capacity was reduced from 66.5% in 2010 to 55% in 2017. In contrast, development of propylene oxide units using co-oxidation processes and the HPPO process have gained priority in recent years as they basically produce no pollution. Examples include a 300 kt/a HPPO-process unit of Jishen Chemical Industry Co., Ltd. that started production in 2014, a 240 kt/a PO/TBA-process unit of Shandong Wanhua Chemical Group Co., Ltd. that started production in 2015 and a 240 kt/a PO/TBA-process unit of Nanjing Jinling Huntsman New Material Co., Ltd. that started production in 2017. As co-oxidation processes and the HPPO process are green production processes, they will be used in more and more new propylene oxide units to be constructed in the future.
   China will still construct or plan to construct several propylene oxide units in 2018 and afterwards. A 120 kt/a unit of Hongbaoli Group Taixing Chemical Co., Ltd. that started construction in March 2017 uses the CHP process and is expected to start production at the end of 2018. A 400 kt/a unit of Jiangsu Bluestar Green Technology Co., Ltd. and a 350 kt/a unit of Taixing Yida Chemical Co., Ltd., both under construction today, use the HPPO process. Table 3 shows the propylene oxide units being constructed or planned for construction. It can be seen from Table 3 that except for one unit that will use the chlorohydrin process all other units will use environment-friendly co-oxidation processes or the HPPO process. If all units listed in Table 3 except for the three units planned for construction start production on schedule, China’s propylene oxide capacity will exceed 5.40 million t/a in 2020.

Table 3  Propylene oxide units being constructed or planned for construction in China

Drivers for demand growth are strong, development is focused on two aspects

   In China, propylene oxide is used mainly to produce polyether polyols, dimethyl carbonate, propylene glycol and nonionic polyol surfactants. The demand for propylene oxide in making polyether polyols accounts for around 80% of the total consumption. Polyurethane production is the most important application sector of polyether polyols in China today.
   With the shift of the global polyurethane production center towards China and the rapid development of sectors like refrigeration, building insulation, energy conservation, environmental protection, new energy sources, new materials and automobiles, along with the support of state policies, the polyurethane sector has entered a golden development period. The polyether polyol sector will therefore develop and the growth of propylene oxide demand will in turn be promoted. It is expected that for a considerable period in the future, polyether polyol production will remain the biggest consumer of propylene oxide.
   Development of the propylene oxide sector should highlight capacity upgrading in the following two aspects:

   1. Upstream/downstream integration of new units

   All propylene oxide producers with a considerable scale in the world have upstream/downstream integrated units. Enterprises should take foreign successes as a reference, adjust upstream/downstream structures, extend the industrial chain, achieve industrial integration, maximize product value and enhance product risk-withstanding ability so as to reap optimal benefits.

   2. Active development of new technologies

   The chlorohydrin process seriously pollutes the environment. In the today’s regulatory environment of stringent environmental protection requirements, the proportion of capacity using the chlorohydrin process keeps coming down. Co-oxidation processes and the HPPO process, which have great advantages in pollutant emission and environmental protection, are gaining greater attention from large enterprises in China. Co-oxidation process technologies are however still owned by several large foreign monopolistic enterprises. Conditions for such patented technologies from abroad are quite strict. Commercialization of the HPPO process is quick, and the process technology can be further improved. The operating rate of propylene oxide units using these processes is quite low, and interested enterprises should invest more in research.
   Despite serious environmental pollution from the chlorohydrin process, absolute advantages can hardly be acquired by other processes to replace it, owing to its simple process and low cost. All these processes will therefore coexist for a considerable period in the future, but market shares of green and environment-friendly processes will grow continually.