Propylene oxide is a small-volume differentiated petrochemical used mostly in the manufacture of polyether polyols for urethanes, propylene glycols, glycol ethers and polyalkylene glycols for a variety of chemical intermediates and functional fluids. Polyether polyols are the major end use for propylene oxide, accounting for 66% of world consumption in 2012, as per IHS. Both China and Western Europe are large consumers of propylene oxide for polyols, together representing 55% of the total, followed by the United States with 22%. Propylene glycol production is the second-largest end use for propylene oxide, with about 18% of the total world consumption in 2012. The United States is the largest consumer for propylene glycols, with about one-third of the world total. Glycol ethers remain a small market for propylene oxide, accounting for less than 5% of global consumption in 2012.
After a steep decline in world economic growth in 2008 and 2009, growth surged in 2010. While GDP and propylene oxide sales improved in 2011, growth in 2012 was modest worldwide, as Europe struggled with the fiscal crises in Greece, Italy and Spain, and China suffered a slowdown in response to the decline in its export markets. During 2008, worldwide consumption of propylene oxide in its derivative uses fell about 4% but suffered another 3.4% decline in 2009, as the full impact of the recession was felt. The decline reflected a severe reduction in both pull-through demand and supply chain inventory, as propylene oxide suffered under the depressed fortunes of its principal durable urethane markets-construction, transportation and furniture. The world propylene oxide decline during 2008-2009 would have been worse if not bolstered by Asian demand and its fastest-growing component, China. While Chinese demand growth fell from 16% in 2007, it was still a positive 8.8% over 2008. World propylene oxide growth reversed direction strongly in 2010 as downstream consumer sales and inventory rebuild pushed propylene oxide volume up nearly 15%, followed by 5.4% in 2011. Nevertheless, with economic stagnation and issues in Europe, propylene oxide growth is expected to have tapered to only 2% in 2012 before it resumes its nominal growth pattern over the next five years. Increasing demand for polyols in China will push consumption upward by more than 40% over the next five years. As a result, China will surpass Western Europe and the United States to become the largest consuming region (26% of total world consumption) by 2017. With slow growth expected in Western Europe (0.2% pa in 2012-2017), the region will slip to second place (25%), followed closely by the United States (24%). Propylene oxide growth in Japan (5% pa) will be driven by a strong recovery from depressed levels in polyol and propylene glycol consumption, which will put it in the fourth position in the world with a 4.2% share of world consumption in 2017.
In 2012, the world propylene oxide (PO) production volumes exceeded 7.7 mln tons. Asia, Europe and North America account for the largest market shares. Together they produced over 7.3 mln tons in 2012, as per Merchant Research & Consulting, Ltd. USA, China and the Netherlands make up top three PO manufacturing countries. Asia-Pacific is the major PO consumer, with consumption volume estimated at above 40% (nearly 3.2 mln tons) of the total. The PO market is expected to continue growing, and the global output is predicted to override 9.5 mln tons in 2018.
As per MCGroup, the global financial recession turned out to be rather troublesome for the world propylene oxide market - much capacity was idled during 2008 and 2009. The trading activity fell by 5-6% and the interest in the material was also sluggish. The year of 2011 is marked by some positive growth trends for the global propylene oxide market. The demand in the Asian countries is on rise - it extends by around 8% annually. The demand growth levels in the developed counties in Europe and in the USA however are at the same time twice as low. New launched and planned capacity additions are set to move the global propylene oxide market further.