Propylene oxide: Chlorohydrin method is limited and difficult to change the excess pattern
Chlorohydrin-based propylene oxide faces policy adjustments
The Guiding Catalogue for Industrial Structure Adjustment (2024 Edition) recently announced by the National Development and Reform Commission and will be officially implemented on February 1 this year classifies chlorohydrin-based propylene oxide and chlorohydrin-based propylene oxide production plants as restricted categories, and chlorohydrin-based propylene oxide and calcium-based propylene oxide saponification processes (except for those with a fresh water consumption of not more than 15 tons per ton of product and a waste residue generation of not more than 100 kilograms on December 31, 2025) as eliminated categories. This means that for chlorohydrin-based propylene oxide plants that do not meet the conditions, the current time to phase out is less than two years.
Longzhong Information said that considering the current large scale of propylene oxide in the proposed project, the growth rate of the supply side is much higher than the growth rate of the demand side, regardless of whether the chlorohydrin plant is shut down or not, the trend of gradually easing the supply of propylene oxide market will not change.
Chlorohydrin method to exit
According to the Secretary-General of the China Polyurethane Industry Association, Lu Guohui, as a traditional process for the production of propylene oxide, the chlorohydrin method has a long history of production, which is characterized by mature production process, high operating load elasticity, good selectivity, low construction investment, low requirements for propylene purity, and strong cost competitiveness. Compared with propylene oxide (PO)/styrene (SM), hydrogen peroxide cumene method (CHP), hydrogen peroxide direct oxidation method (HPPO) and other cleaning technologies, its disadvantage is that the consumption of chlorine gas is very large, and the hypochlorous acid generated in the production process is seriously corrosive to equipment. At the same time, a large amount of wastewater and lime slag are discharged during the production process (traditional chlorohydrin method), water consumption is high, environmental pressure is high, and the cost of treating wastewater is higher than that of other processes.
According to statistics, for every 1 ton of propylene oxide produced by the chlorine alcohol process, 1.5 tons of chlorine gas is consumed, and at least 40 tons of chlorine-containing wastewater and more than 2 tons of calcium chloride waste residue are produced. If caustic soda solution is used instead of lime milk as saponification raw material, the generation of calcium chloride can be eliminated, so no waste residue is generated, but wastewater will still be generated, and the production cost will also increase accordingly.
In 2011, our country has listed the chlorohydrin-based propylene oxide process in the restricted category of the "Industrial Structure Adjustment Guidance Catalogue (2011) ". Since then, due to the immature domestic clean propylene oxide process technology, chlorohydrin-based propylene oxide has been classified as "restricted" rather than "eliminated", and new production capacity can no longer be approved. In recent years, with Sinopec, Wanhua Chemical, Hongbaoli, Yida Chemical and other enterprises making breakthroughs in the clean production technology and project industrialization of propylene oxide, the expectation of chlorohydrin-based propylene oxide withdrawing from the market is increasing day by day. The introduction of the "Industrial Structure Adjustment Guidance Catalogue (2024) " further clarifies the policy guidelines for the withdrawal of chlorohydrin-based propylene oxide.
Cleaning process capacity has skyrocketed
In recent years, the growth rate of propylene oxide production capacity in our country is amazing, and the new production capacity is clean production process. According to the statistics of Longzhong Information, the annual production capacity of propylene oxide in China will be 4.902 million tons by the end of 2022, the output will be 3.80 million tons, and the utilization rate of propylene oxide production capacity will be 77.5%. Since 2023, propylene oxide plants such as Yida Chemical, Zhejiang Petrochemical, Jiahong New Materials, Jincheng Petrochemical, Qixiang Tengda, and Sinochem Lianyungang have been put into operation successively. At the same time, with the implementation of environmental protection policies such as "double carbon", a number of chlorohydrin process plants such as Tianjin Dagu and Fuzhou Bay Chlor-Alkali Industry have been permanently shut down, and the start In 2019, the domestic annual production capacity of chlorohydrin-based propylene oxide 1.84 million tons, accounting for about 54% of the total production capacity of propylene oxide. In 2023, the production capacity of chlorohydrin-based propylene oxide decreased slightly to 1.62 million tons, and the proportion of the total production capacity of propylene oxide decreased significantly to about 26%. The main production enterprises include Hangjin Technology, Binhua Group, Shandong Jinling, Shandong Sanyue, Shi Dashenghua, etc.
Despite the decrease in market share, compared with the clean process, the overall profitability of the chlorohydrin-based propylene oxide project in recent years has maintained a moderately high level. In 2023, due to the lower-than-expected performance on the demand side, the propylene oxide market fluctuated downward throughout the year, and the price range fell back to around 10,000 yuan, narrowing the fluctuation range. According to statistics from Tiantian Chemical Network, the average annual profit of the chlorohydrin-based propylene oxide process was around 786 yuan per ton, a year-on-year decrease of 33.2%, while the HPPO process was mostly in a state of loss.
The market dilemma is difficult to reverse
Industry analysts believe that the current scale of propylene oxide in the proposed project is very large, and the accelerated withdrawal of the chlorohydrin method from the market is expected to alleviate the current plight of overcapacity of propylene oxide and low industry profitability to a certain extent. However, compared with the limited chlorohydrin method to eliminate production capacity, our country is expected to add about 3.80 million tons of new clean process capacity before 2025. Even if the chlorohydrin method is completely withdrawn, it will be difficult to reverse the current market dilemma of the propylene oxide industry.
Longzhong Information said that most of the chlorohydrin process plants currently in production cannot meet the requirements of water consumption and waste residue generation for the time being. Enterprises are evaluating the cost and difficulty of technological transformation. Due to the mature and safe chlorohydrin process and stable product quality, and relatively cost advantages, enterprises are more interested in actively technological transformation to meet policy requirements and continue to operate chlorohydrin process plants. The specific progress remains to be seen.
In the follow-up, according to the existing new production plan, it is estimated that the domestic propylene oxide production capacity may reach 10.67 million tons/year in 2025, the capacity utilization rate will drop to 52%, and the market supply and demand fundamentals are in a loose pattern. For example, some plants of the chlorohydrin method will not meet the policy requirements and will be eliminated. After excluding the annual production capacity of the chlorohydrin method of 1.59 million tons, the domestic annual production capacity is still around 9.08 million tons. The gap can be made up by the new plant being put into operation and the unstable plant being started in the early stage. However, the loss in the central and northern markets, especially in Shandong, is expected to trigger an upward market for a certain period of time. At the same time, new enterprises in the surrounding area will re-match with downstream customers, and a If the chlorohydrin process plant basically meets the policy requirements through technological transformation, then the original cost advantage of the chlorohydrin process plant may be weakened after increasing the investment in technological transformation.
According to Longzhong Information, in general, the trend of the propylene oxide market gradually transitioning to a looser direction remains unchanged regardless of whether the chlorohydrin plant will be partially shut down when the growth rate on the supply side is much higher than the demand side.
