Propylene Market Is Estimated to Witness High Growth Owing to Increasing Demand from the Petrochemical Industry & Growing Infrastructure Development
The Propylene Market is estimated to be valued at USD 4.66 Billion in 2024, exhibiting a CAGR of 6.1% over the forecast period (2024-2031). Increasing demand for propylene from the petrochemical industry for the production of various chemicals and plastics is a key factor driving the market growth. Propylene is majorly consumed in the manufacturing of polypropylene, propylene oxide, cumene, and acrylonitrile, which finds application in various end-use industries. Furthermore, rapid urbanization and growing infrastructure development activities in emerging economies are expected to boost the market growth during the forecast period.
The propylene market is primarily driven by the increasing demand from petrochemical industry for the production of various chemicals and plastics. Growing demand from the construction and automotive industries is further augmenting the consumption of propylene-based chemicals and plastics. Additionally, ithe mplementation of projects aimed at infrastructure development and expansion of urban areas in developing countries will positively influence the market growth during the forecast period.
Growing Demand from Polypropylene Production
The polypropylene industry is one of the largest end-use sectors for propylene. Polypropylene is widely used in the packaging, automotive, construction, and several other industries due to its durable and lightweight properties. According to industry reports, the global polypropylene market was valued at over USD 100 billion in 2019 and is projected to grow at a CAGR of 5% from 2020 to 2027. This steady rise in the polypropylene demand directly correlates to higher consumption of propylene for its production. As polypropylene finds more applications across various sectors, the demand for propylene from this end-use segment will continue increasing in the coming years.
Expanding Derivatives and Chemical Industry
Apart from polypropylene, propylene is also used extensively in the production of several derivatives and chemical compounds. Some major propylene derivatives include propylene oxide, cumene, acrylonitrile, alcohols, and glycol. These propylene-based derivatives then find wide applications in industries like polyurethane foam, solvents, plasticizers, resins, paints, coatings, etc. With rising consumption across derivative industries, propylene demand is boosted. An expanding chemical industry worldwide augurs well for future growth of propylene-consuming derivatives. Infrastructure development in emerging nations also provides an impetus as many derivatives are ingredients for the construction sector.
Volatility in Crude Oil and Naphtha Prices
Propylene is produced through several pathways including steam cracking of hydrocarbon feeds such as naphtha and gas oil. Fluctuations in crude oil and naphtha prices directly impact the economics of propylene production. Uncertainties around oil prices owing to geopolitical tensions and demand-supply dynamics add to the dilemma. Higher feedstock prices squeeze margins for propylene producers. This volatility poses as a restraint, restricting capacity expansions and investments in the market. Stable crude and naphtha costs are critical for sustainable growth of the propylene industry.
Stringent Environmental Regulations
Like other petrochemical operations, propylene production is subject to strict environmental standards with regards to air pollution, wastewater treatment and hazardous waste disposal. Emission norms for volatile organic compounds (VOCs) are especially important, considering propylene's harmful effects. Compliance with such regulations involves significant capital expenditure and operating costs. Tougher rules proposed by agencies such as EPA limit flexibility for industry players. This acts as a restraint for capacity additions near populated areas due to worries over community impact and liability issues. Sustainable solutions are required to balance environment protection and business needs.
Expanding Derivatives Production in Asia Pacific
The Asia Pacific region dominates the global propylene consumption backed by vibrant chemical industries and downstream derivative sectors especially in China, India, ASEAN, and South Korea. Since derivatives require propylene as feedstock, their rising uptake in Asia Pacific translates to increased demand. This fast-growing region still has headroom for urbanization-led infrastructure growth stimulating derivative applications further. Developing Asia Pacific will drive the global propylene market in future with a need to improve domestic supply capacity. Propylene producers can capitalize on this opportunity through capacity additions, technology partnerships and backward integration in Asia Pacific.
Recovery of Refinery Propylene
Most refineries currently use propylene present in refinery off-gases as a low-value fuel. However, with improving recovery technologies, refiners can extract this propylene in an economically efficient manner. Units like propane dehydrogenation or steam cracking of propane can convert refinery-struck propylene to higher-value polymer-grade products. This presents an opportunity for refiners to diversify revenue through propylene sales. Given abundant global refining capacities, recovering a few tones more of propylene per barrel of crude could greatly boost available volumes. Propylene producers and refiners should cooperate to realize this potential opportunity through joint ventures.
Link - https://www.coherentmarketinsights.com/market-insight/propylene-market-1997
Key Developments
- In March 2024, Dow launched bio-circular and circular Propylene Glycol solutions in North America, marking a significant step towards sustainability in the chemical industry.
- In 2023, Sumitomo Chemical started building a pilot facility to develop a process for directly producing propylene from ethanol, a sustainable chemical raw material that is gaining attention.
- In February 2022, ExxonMobil announced plans to start a polypropylene production capacity in Louisiana, U.S. by the end of 2022. The expansion, budgeted at US$ 500 million, aims to strengthen ExxonMobil's market presence in the U.S. and neighboring countries.
- In April 2022, Shell plc, a subsidiary of Shell plc, signed a Production Sharing Contract to formally acquire a 25% stake in the Atapu field. Shell paid US$ 1.1 billion to Petrobras for the increased stake in the field. With the contract now signed, Shell plc will start receiving its additional share of oil from the field.
Key Players
BASF SE, BP Plc., China Petroleum & Chemical Corporation, ExxonMobil Corporation, IRPC Plc., LyondellB, DHALOP CHEMICALS, Vizag Chemical, Borealis AG, Braskem, Daelim Co. Ltd, TotalEnergies, INEOS, SABIC, SIBUR International GmbH, Sumitomo Chemical Co. Ltd, INEOS, Daelim Co. Ltd, and Borealis AG
