Propylene Oxide (PO) is a crucial intermediate in the petrochemical industry used to manufacture a wide range of chemical derivatives, such as polyether polyols, propylene glycols, propylene-based glycol ethers, among others. Its downstream sectors include chemicals, pesticides, automobile, construction, and more.

I. Downstream Products of PO

1. Polyether Polyols

The consumption of PO in the manufacture of polyether polyols represents the largest share of PO end-uses, according to an analysis by PUdaily. These polyols are primarily used in producing polyurethane foam and to a lesser extent in CASE. In 2023, about 79% of PO was consumed to produce polyether polyols in China.

Polyether polyols find extensive applications across various industries including furniture, automobile, refrigerators, and plastic runways. China, the world’s largest consumer of polyether polyols, has witnessed a continuous growth in demand in recent years.

2. Propylene Glycol

Propylene glycol is the second largest downstream product of PO. It is mainly utilized in the production of unsaturated polyester resins and has some applications in food processing, pharmaceuticals, and cosmetics.

3. Other Downstream Products

There are nearly a hundred derivatives of PO in production, with a vast quantity and increasingly diverse applications to meet the varied needs of different industries. Apart from polyether polyols and propylene glycol, other products such as propylene glycol methyl ether  (PGME) and dimethyl carbonate (DMC) are widely used in sectors like resins, solvents, surfactants, plasticizers, stabilizers, and more.

II.Challenges in Downstream Sectors of PO

1. Slowing Demand Growth

Chinese economic recovery has been slower than expected after the Covid-19 pandemic. Due to conservative consumers, coupled with the real estate downturn as well as saturated refrigerator and freezer markets, downstream sectors of PO such as home appliance and building insulation materials lack growth momentum. 

2. Intensified Market Competition

The addition of new PO facilities has resulted in a remarkable increase in supply. The oversupply leads to intensified market competition. Profit margins of producers using traditional processes are squeezed.

3. Technological Innovation

Strict environmental regulations are promoting the PO industry to move towards a green transformation.

4. Cost Pressures in Environment Protection

The PO industry faces significant challenges in technological innovation. PO producers are required to make continuous investments in R&D and human resources. Industrial upgrading also demands strong technical and financial capabilities, which may present a challenge for some small and medium-sized enterprises.

5. International Trade Situation

Changes in international trade may impact the import and export of PO in China. Price fluctuations in the international market will also have an impact on the Chinese market.

III. Development Trends of PO Downstream Sectors

1. Continuous Growth in Demand

Driven by economic recovery and consumption upgrade, the demand for PO has kept growing. As of the end of June, China’s outputs and sales of automobiles both exceeded 30 million units in 2024. The rapid growth of industries such as automobiles will boost the demand for polyether polyols, propylene glycols, and other downstream products of PO, thereby pushing up the development of PO industry.

2. Technological Innovation and Industrial Upgrading

Due to rapid capacity expansion, the growth in PO supply has exceeded the pace of demand recovery in recent years, leading to a gradual emergence of supply-demand imbalance. An oversupply of all-purpose polyether polyols results in a more competitive market. Chinese enterprises should focus more on technological innovation and optimizing product structures to meet diverse market demands in the long run.

3. Environmental Protection and Sustainable Development

The promotion of environmental protection policies and consumers’ pursuit of high-quality products are driving downstream sectors of PO towards high-end and differentiated development. It’s crucial to increase technological innovation and process improvements, reduce energy consumption and emissions during production, and enhance resource utilization efficiency. Furthermore, strengthening environmental management through waste treatment and recycling will be emphasized.

IV. Conclusion

Against the backdrop of continuous growth in demand and rapid capacity expansion, opportunities and challenges coexist in the downstream sectors of PO in China. Enterprises need to keep track of market trends and policy changes, enhance technological innovation capacities, increase international cooperation and communication to address these challenges and maintain a competitive edge.