Zhang Xiaohan, CNCIC
Domestic supply-demand gap remains
(1) Production technology: Traditional and advanced technologies coexist
The chlorohydrin process accounts for around 50% of China’s propylene oxide (PO) capacity in 2020 and the rest are co-oxidation, HPPO and CHP processes.
(2) Producers: Capacities concentrate in east China
China had 19 PO producers (as shown in Table 1) in 2020, of which, 13 are located in east China, with a combined capacity covering 69.3% of the domestic total. Shandong has the largest number of producers and hosts 47.2% of total domestic PO capacity.
(3) Consumption: Polyether polyols is the largest consumer
China’s PO consumption reached 2 990 kt in 2020, mainly attributed to polyether polyols, propylene glycol and propylene glycol ether, etc. Polyether polyols accounted for 70% of the total domestic PO consumption. Figure 1 shows PO consumption structure in 2020.
Figure 1 China’s PO consumption structure in 2020
Polyether polyols In 2020, polyether polyols consumed 2 080 kt of PO, taking up 70% of China’s total PO consumption.
Propylene glycol In 2020, propylene glycol consumed 279 kt of PO, accounting for 9% of the domestic total, driven by higher plants run rate.
Propylene glycol ether In 2020, propylene glycol ether consumed around 189 kt of PO, covering 6% of the domestic total.
Others Apart from the above major applications, PO is used in flame retardants, isopropanolamine, cellulose and antifreeze industries, which have scattered distribution of customers and relatively low consumption volume. In 2020, these fields consumed around 434 kt of PO, accounting for 15% of the domestic total. The consumption volume of fire retardants, isopropanolamine and cellulose was relatively large, at a combined 200 kt.
(4) Supply-demand: The gap still in place
China’s PO capacity stood at 3 290 kt/a in 2020. The average plant run rate was 77% and domestic PO output dropped by 330 kt year on year due to the Covid-19 pandemic. Domestic PO consumption fell by 10% year on year to 2 990 kt in 2020. The supply-demand gap reached 467 kt. Figure 2 shows China’s PO supply-demand conditions in 2015-2020.
China likely to become self-sufficient in PO on expanding capacities
(1) Supply forecast: A hefty volumes of new capacities, concentrating on HPPO and PO/SM process.
Statistics show that there are 24 planned new PO projects in China, with capacities totalling 6 150 kt/a, mainly located in east, south and north China. Excluding the phase-out of the chlorohydrin process, China’s PO capacity will increase to 9 430 kt/a by 2025. Table 2 shows China’s planned new PO projects.
(2) Consumption forecast: Polyether polyols will remain the major PO consumer in China
China’s PO consumption is expected to continue rising and will reach 4 050 kt by 2025, with the average annual growth rate at 6.3% in 2020-2025.
The major downstream polyether polyols have a large output of rigid foam polyether and will remain the major growth driver of PO consumption. China has 18 new or planned polyether polyols projects, with capacities totalling 2 970 kt/a. If these projects are started up smoothly, their PO consumption will stand at around 2 800 kt by 2025.
Propylene glycol consumption fell by 6.7% year on year in 2020 amid the global Covid-19 pandemic and may recover in the coming five years. Its PO consumption will reach around 450 kt by 2025.
Propylene glycol ether is the third largest PO consumption field. Its consumption is predicted to reach around 220 kt by 2025.
Other downstream chemical industries contribute to a small portion of PO consumption. Low operating rates at the fire retardants and cellulose sectors due to environmental inspections are likely to weigh on PO consumption. Figure 3 shows PO consumption structure forecast in 2025.
(3) Supply-demand relation: Self-sufficiency within the reach on booming capacities
China’s PO capacity will reach 9 430 kt/a by 2025 and domestic output will increase sharply following the completion and start-up of new PO projects. On the demand side, domestic PO demand will rise to 4 050 kt by 2025, driven by consumption from polyether polyols and propylene glycol. China will become self-sufficient in PO.
