Panoramic analysis of propylene oxide industry pattern
Propylene oxide industry overview
Propylene oxide (PO), also known as methyl ethylene oxide or propylene oxide, is an important organic chemical synthesis raw material and synthesis intermediate. Its chemical properties are active, easy to open ring polymerization, and can react with water, ammonia, alcohol, carbon dioxide, etc., to form corresponding compounds or polymers.
our country is the world's largest producer and largest net importer of propylene oxide.
In terms of output, the industry's output has shown a slow upward trend in the past five years.
According to Baichuan Yingfu, the total domestic propylene oxide production capacity in 2021 will be 3.829 million tons, and the total output will be about 3.653 million tons, an increase of 27.02% year-on-year. By the end of 2025, China will add 3.87 million tons of propylene oxide production capacity, and the production capacity will be mainly released in 2022. The increase in supply side is significant.
There are nearly 100 downstream derivatives of propylene oxide, with a large number and gradually rich applications. They can be used as solvents for cellulose esters, resins, and main raw materials for the production of surfactants, plasticizers, and stabilizers. They are widely used in chemical, pesticide, automotive, construction, textile, daily chemical and other industries.
With the improvement of real estate construction and the penetration rate of automotive, polyurethane coatings and other industries driving industry growth, the demand for propylene oxide is expected to continue to maintain a high growth rate.
Propylene oxide industry chain
Propylene oxide has a complete and extensive industrial chain.
As a derivative of propylene, its upstream raw materials are propylene and naphtha and propane required to produce propylene, and the main downstream products are polyether polyols, propylene glycol methyl ether, dimethyl carbonate, propylene glycol ether, etc.
Propylene oxide industry chain:
Source: Zhuochuang Information, line check
Propylene oxide upstream feedstock
Propylene oxide is usually oxidized from propylene by different processes. It is the second largest propylene derivative after polypropylene and currently accounts for 7% of propylene derivatives. Our country is the country with the largest propylene production capacity and consumption, accounting for about 30% of the global corresponding indicators.
From the perspective of the sub-industrial chain, there are many downstream products of propylene, with a wide range of application fields, which can be used in plastics, coatings, medicine, electrical appliances, automobiles, etc.
From the perspective of new materials, polypropylene catalyzed by metallocene compounds, polypropylene downstream products (dry process preparation of lithium battery separators, modified plastics), acrylic acid downstream (high-performance acrylate emulsions, special acrylate monomers, superabsorbent resins SAP, acrylic rubber ACM, acrylonitrile-styrene-acrylate copolymer), polymethyl acrylate PMMA formed by copolymerization of MMA monomers and acrylates, and propylene oxide downstream (battery-grade DMC) all have good investment opportunities.
From the demand side, in our country, the current annual demand equivalent of propylene is about 40 million tons, and the average annual demand growth rate is about 9%. The downstream demand is mainly polypropylene, and it is the main demand increase.
In recent years, with the successive commissioning of PDH and CTO/MTO plants, the rate of propylene import substitution has accelerated, and it is expected that the propylene gap in China will gradually narrow.
From the perspective of future competition, companies with better cost control and scale advantages can gain the lead.
The main producers of acrylic acid and ester industry in China include Satellite Chemistry, Shanghai Huayi, Yuke Chemical, Formosa Acrylate, Yangzi BASF, Wanhua Chemical, etc. Among them, the scale of satellite chemical production ranks first in China.
In 2021, the CR5 production capacity of major domestic acrylic enterprises will account for 60%, and the CR8 will account for 81%. Satellite petrochemical 19%; Yuke Chemical 14%; Yangzi BASF 10%; Shanghai Huayi 9%; Formosa Acrylate 9%.
Production capacity share of major domestic acrylic acid enterprises in 2021:
Source: Zhuochuang Information, Longzhong, Xingxun
Propylene oxide downstream
The main products downstream of propylene oxide are polyether polyols, propylene glycol methyl ether, dimethyl carbonate, propylene glycol ether, etc.
Polyether polyol
Polyether polyols are the main downstream products of propylene oxide and the core raw materials for synthesizing polyurethane.
Domestic consumption of polyurethane foam is mainly concentrated in the refrigeration and construction industries. Polyurethane foam is used as a cushion material, sound-absorbing material and shock-absorbing material in home appliances, automobiles, furniture and other fields.
The overall overcapacity of the domestic polyurethane downstream industry, especially the excess pressure in the soft foam market, is the greatest. The profit margin of the downstream industry is 3-4%, and the profit distribution is mainly in the hands of the upstream MDI, TDI, and PO manufacturers, mainly determined by technical barriers and industry status.
Dimethyl carbonate (DMC)
Electrolyte and polycarbonate drive demand for dimethyl carbonate.
With the rapid development of lithium-ion batteries, DMC has been applied to lithium-ion battery electrolyte solvents due to its good performance.
On the supply side, the production capacity of the top six domestic manufacturers accounts for 66.77% of the total production capacity, and the production capacity supply is relatively concentrated.
At present, most of the DMC production capacity is industrial grade, and only a few enterprises such as Lu Hengsheng, Zhejiang Petrochemical, Shi Dashenghua, Anhui Hongsifang, Haike Xinyuan, and Ke shares have some battery-grade DMC capacity.
Among them, Zhejiang Petrochemical and Shi Dashenghua adopted the EO route to expand production; Hualu Hengsheng and Anhua Group adopted the coal head process to expand production.
Satellite chemistry will have certain advantages in high-purity DMC production due to its high-purity raw materials and integrated whole industrial chain.
Propylene oxide market landscape
From the perspective of global propylene oxide production capacity distribution, the global propylene oxide industry is highly concentrated, with production capacity in Asia concentrated in China, Saudi Arabia, Singapore, Japan, Thailand, and South Korea; production capacity in Europe and the United States is concentrated in DowDuPont, LyondellBasell, Shell, Huntsman, and BASF chemical giants.
Domestic production capacity is mainly concentrated in East China. The polyether production capacity in East China accounts for 79%, of which Shandong Province accounts for 38%.
As of June 2021, there are a total of 20 suppliers of propylene oxide in our country, with a capacity of CR5 and CR8 of 47% and 65% respectively. Among them, China Shell with the largest PO capacity has an annual output of 580,000 tons.
In 2021, China Shipping Shell, Zhenli Chemical and Wanhua Chemical held the leading position with 13.81%, 13.34% and 12.64% respectively, and the three leading enterprises contributed 59, 57 and 540,000 tons of production capacity respectively.
Source: Southwest Securities
Propylene oxide industry chain related manufacturers also include Sinochem International, Bohai Chemical, Hongbaoli, Yida, Binhua, Weiyuan, Qixiang Tengda, Huatai, Hangjin Technology, etc.
With the arrival of the propylene oxide production cycle, Baichuan Yingfu expects domestic propylene oxide production capacity to increase by 55% to 6.96 million tons in the second half of 2022.
Propylene oxide capacity deployment (10,000 tons):
Source: Zhuochuang Information, Huaxin Securities
From the demand side, the consumption of polyurethane in our country has driven the demand for polyether polyols, which in turn has driven the demand for propylene oxide. With the obvious recovery of the downstream demand side of propylene oxide, the price of propylene oxide will be supported. The shortage of chemical raw materials caused by the shortage of energy in Europe, as well as the shutdown of major production areas such as Saudi Arabia, Japan, and South Korea overseas, resulting in a reduction in domestic imports, the overall market supply and demand are tight, and the market is expected to continue to maintain a relatively high level.
