Environmental Concerns as Key Driver of Propylene Oxide Market

Propylene oxide (PO) plays important role in numerous chemicals value chains, composed of multiple indispensable upstream and downstream products. As such, fairly large fluidity, dynamicity and volatility of the global and regional PO market are inevitable, driven by a magnitude of economical, technological, operational, seasonal and other factors. Among these factors, environmental reasons are of key significance. These reasons affect PO markets in both developed and developing countries. The vivid example is the Chinese PO market where environmental concerns start to dominate the political and economic agenda. The 19th National Congress of the Communist Party of China, held between 18 and 24 October 2017, put a major emphasis on reaching certain environmental targets and provided the general background for the operation of various Chinese industrial enterprises, including in the chemical field. These enterprises should start to implement a range of rigorous measures in order to comply with national environmental legislature or risk being closed in case of non-compliance. Thus, quite recently closures affected multiple PO facilities in Shandong province. This province holds half of China’s PO capacity. In general, China’s total PO production capacity is about 3 176 000 tons per year and this country accounts for the largest PO capacity in the world.

Propylene oxide: structure of the globel capacity by country in 2016

Shandong hosts such major PO manufacturers as Shandong Binhua Group Co., Shandong Sanyue Chemical Co., Shandong Jinling Chemical Co. and others. The Chinese PO market is also impacted through environmentally-induced closures of facilities producing PO upstream or downstream products. This primarily relates to propylene-manufacturing facilities. It should be noted that environment-protecting measures undertaken by the Chinese government may lead to the serious consequences for the whole chemical industry in China (and the world in general), while their actual success level yet remains unknown and unpredictable. However, the determination and direction of efforts may be considered a good sign for the country economy and well-being, in general, and its chemical sector, in particular.

More information on the propylene oxide market is available in the in-demand research report “Propylene Oxide (PO): 2017 World Market Outlook and Forecast up to 2027”.