Supply side:

In 2023, China's propylene oxide production capacity saw a significant growth rate, with new production capacity including 150,000 tons/year from Tianjin Petrochemical and 300,000 tons/year from Jincheng Petrochemical. In 2023, the total production capacity exceeded 6.1 million tons/year, and the production also increased by more than 10% year-on-year. The expected continuous expansion of production capacity in 2024 is expected, with new production capacity expected to be around 3 million tons per year, and the supply side may be in a relaxed state.

Demand side:

Propylene oxide is an important basic chemical raw material, which is mainly used to produce polyether polyols, propylene glycol and various non-ionic surfactants, among which polyether polyols are important raw materials for the production of polyurethane foam, insulation materials, elastomers, adhesives and coatings, and various non-ionic surfactants are widely used in petroleum, chemical, pesticide, textile, daily chemical and other industries. The growth rate of demand side production capacity in 2023 WAS not as high as that of propylene oxide, so it mainly followed up with low prices on demand. In 2024, the downstream polyether polyol and propylene glycol industries may increase production capacity.

Import and export:

According to customs data, the total export volume of propylene oxide in China from January to December 2023 was 4,303,976 kilograms, a year-on-year decrease of 63.48%. According to customs data, the total import volume of propylene oxide in China from January to December 2023 was 345,731,204 kilograms, a year-on-year increase of 13.64%. It is expected that the import volume will continue to grow in 2024.

Cost side:

Upstream propylene: In 2023, the propylene market in China fluctuated and declined. Taking Shandong propylene as an example, the average price at the beginning of the year was 7,244.60 RMB/ton, and the average price at the end of the year was 6,868.25 RMB/ton, with a 5.19% decline in the domestic market. Based on a comprehensive analysis of crude oil and supply and demand, it is expected that the center ,of propylene prices in 2024 may continue to decline compared to 2023, and the expected decline is relatively controllable.

Comprehensive prediction:

In summary, the expected growth of propylene oxide production capacity in 2024, market competition pressure may increase, and the timing of new production capacity deployment and the start and stop of enterprises are worth paying attention to. The demand side is also expected to increase, and downstream companies may still maintain a cautious and just need to follow up mentality while observing the loose supply side. The use and purchase model, market game consolidation situation may still exist, combined with the cost impact of different processes, It is expected that the propylene oxide market will continue to adjust its operating status in 2024.

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