propylene oxide, also known as propene, is an unsaturated organic compound with the chemical formula C3H6. It serves as a basic petrochemical raw material and is mainly used to produce polypropylene oxide and propylene oxide oxide. Polypropylene oxide is a highly durable yet lightweight plastic used in a wide range of applications such as packaging, textiles, stationery, automotive and construction materials.
The global propylene oxide market is estimated to be valued at US$ 151 billion in 2023 and is expected to exhibit a CAGR of 5.1% over the forecast period 2023-2027, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
Rising polypropylene oxide demand represents a major opportunity for the propylene oxide market. Asia Pacific is witnessing robust growth in the polypropylene oxide market owing to increased consumption in packaging, automotive, and construction industries. China alone accounts for over 40% of global polypropylene oxide demand. The country's 13th Five-Year Plan focuses on increasing investment in transportation and rural infrastructure development which will strengthen the polypropylene oxide market. India also promises strong polypropylene oxide demand on account of rapid urbanization, rising disposable incomes, and growth in end-use industries. As polypropylene oxide is the primary derivative of propylene oxide, its surging demand across developing economies will propel the propylene oxide market forward during the forecast period.
Porter's Analysis
Threat of new entrants: The threat of new entrants in the propylene oxide market is low due to the high costs associated with production facilities and infrastructure. Established players who have access to raw materials and distribution networks have significant advantages over new players.
Bargaining power of buyers: The bargaining power of buyers in the propylene oxide market is high. Buyers have high bargaining power due to the availability of substitute products and undifferentiated nature of propylene oxide. Buyers can easily switch between suppliers based on price and quality.
Bargaining power of suppliers: The bargaining power of suppliers is moderate. While there are few major suppliers of raw materials for propylene oxide production, suppliers still depend on established players for off-take agreements. Supplier switching costs are also moderate.
Threat of new substitutes: The threat of substitutes is low to moderate. While functionally similar chemicals can be used as substitutes for some applications of propylene oxide, limitations in terms properties restrict broad substitution. Established application areas remain hard to substitute.
Competitive rivalry: The competitive rivalry in the global propylene oxide market is high due to the presence of numerous domestic and international players competing for market share. Players compete based on capabilities, product quality, and price.
SWOT Analysis
Strengths: propylene oxide has diverse applications and is a basic petrochemical with growing demand. Leading players have access to raw materials and economies of scale.
Weaknesses: propylene oxide production is capital intensive and vulnerable to fluctuations in crude oil/natural gas prices. Environmental regulations regarding emissions are increasing production costs.
Opportunities: Rising polymer demand from packaging and construction industries in Asia present an opportunity. Technologies to produce propylene oxide as a byproduct of ethanol provide new opportunities.
Threats: Overcapacity can lead to pricing pressures. Strict environmental norms regarding air pollution are a challenge. Substitution threat from alternative chemicals is mounting.
Key Takeaways
The global propylene oxide market is expected to witness high growth in the coming years. The global propylene oxide market is estimated to be valued at US$ 151 billion in 2023 and is expected to exhibit a CAGR of 5.1% over the forecast period 2023-2027.
Rapid industrialization and infrastructural development are driving growth in Asia Pacific. China dominates global propylene oxide demand and capacity additions. The Chinese government is investing heavily in propylene oxide cracker projects to fulfill domestic demand. North America and Europe account for over 30% share of global propylene oxide consumption led by demand from polymer industries. They are mature markets with stable growth. However, future capacity additions are planned in the Middle East and Asia Pacific regions to leverage low feedstock costs.
Key players: Key players operating in the propylene oxide market are Dow Chemical, ExxonMobil, LyondellBasell, SABIC, and BASF. These major players have integrated production facilities and long term offtake agreements with buyers to maintain consistent supply.
The Global Propylene Oxide Market is forecast to reach USD 27.24 Billion by 2028, according to a new report by Reports and Data.
Propylene oxide is an organic flammable, volatile, and colorless liquid compound that is soluble in both alcohol and ether.
The compound is used as an intermediate for the manufacture of various commercial products.Increase in demand for the product by various end-use industries such as constructions, packaging, automotive, furnishings, and textiles is anticipated to patronize the growth of the market in the coming years.
The market is mainly driven by the growth in demand for polyether polyols, rising demand owing to the increase in its applications, huge investment in infrastructural spending, and an increase in the demand for automotive products.Propylene oxide finds its application in tub-shower, gasoline tanks, and boat hulls.
Rise in the consumption of products that include polyalkylene glycols, popylene glycols, and propylene glycol ethers will propel market expansion.
Propylene Oxide is used in adhesives, grouts, paints, coatings, waterproofing materials in both the construction and infrastructure industry.Increase in construction in emerging, and developed nations such as China, India, Brazil, Saudi Arabia, UAE, and Qatar will influence the growth of the market.Propylene oxide is also used in various end-use products such as hydraulic fluids, automotive coolants, engineering fibers, and plastics.
