Propylene oxide

02 August 1999 00:00  [Source: ICB]

The future looks bright for propylene oxide, with both demand and supply on the rise, and a recovery in export markets such as Asia


West European demand for propylene oxide (PO) is estimated to be around 1.2m tonne and growing at 3-5%/year, with a similar rate being recorded in the US. Around 80% of European PO is consumed captively, largely for polyurethanes, with just 20% appearing on the merchant market. Global demand last year stood at around 4m tonne, following on from growth rates put at 3-4%/year through the 1980s and the first half of the 1990s. Growth has quickened recently to nearer 4-5%/year and is expected to recover to over 6%/year in the Far East by next year.

In 1997 European production capacity was reported to be operating flat out and supply has been tight until this year. Operating rates are expected to drop further between 2000 and 2003 as Basell (the 50:50 joint venture between Shell and BASF) and Repsol have new PO/SM plants coming onstream later this year. Erdölchemie is expanding its existing units and Dow is considering extra capacity at Stade. Late last year EniChem doubled its capacity at Priolo, Italy, and BASF has just added some capacity at Ludwigshafen, Germany. Lyondell, however, has postponed plans for its PO/SM unit in the Netherlands until 2003. Extra capacity is also planned at a number of Far Eastern locations, including Singapore, where BASF and Shell are planning a similar unit to the Basell one. The three US producers seem not to be hiking capacity and it is difficult to see other players entering production here.


Around 90% of propylene oxide (also known as 1,2-epoxipropane or methyl oxirane) goes into three main uses: polyether polyols (65%), propylene glycol (21%) and propylene glycol ethers (4%). Polyether polyols are used in manufacture of polyurethanes, in reaction with MDI or TDI, while propylene glycol finds a major outlet in unsaturated polyester resins. Other uses (10%) include production of flame retardants, synthetic lubricants, oil field drilling chemicals, butanediol, propylene carbonate, allyl alcohol, modified starches and textile surfactants.


Propylene oxide can be made by chlorohydrin or hydroperoxide routes. In the older chlorohydrin process - used by Dow Chemical and Erdölchemie, amongst others - propylene and chlorine react in the presence of water to form propylene chlorohydrin which is further reacted with caustic soda or lime to obtain PO.

A process gaining popularity is the POSM route where ethylbenzene is first reacted with oxygen to make ethylbenzene hydroperoxide and then with propylene to form PO. The phenylmethylcarbinol coproduct is dehydrated to styrene. This route is used by Lyondell and Shell and in the new plants from Repsol and Basell. An alternative hydroperoxide route uses isobutane which makes a tert-butyl alcohol coproduct that can be converted to MTBE.

Dow has recently purchased POSM technology from Nizhnekamskneftekhim in Tartarstan and proposes to use it in a 250 000 tonne/year unit in its planned petrochemicals complex at Tianjin, China.

Much research has been conducted into direct production of PO by vapour phase oxidation of propylene, but a viable route appears elusive (ECN 26 January 1998). Efforts have also been conducted into the direct combination of hydrogen and oxygen to make hydrogen peroxide coupled with simultaneous or successive production of PO (ECN 16 March 1998). EniChem is developing a process based on the reaction of propylene with hydrogen peroxide catalysed by titanium silicalite.

Health & safety

Skin contact with PO can cause severe irritation or burns while breathing irritates the nose, throat and lungs. PO may be carcinogenic in humans. It is a highly flammable and reactive chemical and is a dangerous fire and explosion hazard.


The tightness of supply in the European market in 1997 took PO prices to record high levels of around DM2.20-2.40/kg at year end, but they have been easing down since the start of 1998 with a steeper drop in January this year followed by a period of stability. Recent large hikes in propylene feedstock pricing have sent producers looking for increases, and current price levels FD NWE Europe are reported at DM2.00-2.25/kg, with most business still being done at the lower end of this range. Producers are looking for levels closer to DM2.20-2.30/kg after the summer.


The tightness of the market is expected to loosen as capacity comes onstream, but most of this is for captive polyols use. BASF, for instance, will be self-sufficient in PO with the Basell startup.

Europe may be able to export some of the extra capacity to the US and Far East, especially as growth rates in the latter begin to recover ahead of expansions there. Thus, with reasonable strong demand being pulled along by use in polyols (growing at 4-5%/year) and PO derivatives such as butanediol and ethers, PO supply is not expected to become long for any great length of time. Pricing should improve after the decline through 1998 and early 1999, much of which was occasioned by high inventory and market share competition around the turn of the year. But whether margins can be improved after the steep propylene increases remains to be seen. The outlook looks positive for producers in the longer term.


Producer Location Capacity

Western Europe

Basell Moerdijk, Netherlands 250±

BASF Ludwigshafen, Germany 124

Dow Chemical Stade, Germany 500@

EniChem Priolo, Italy 115

Erdölchemie Cologne, Germany 150+

Lyondell Fos-sur-Mer, France 200

Rotterdam, Netherlands 245

Repsol Puertolano, Spain 60

Tarragona, Spain 150>

Shell Moerdijk, Netherlands 190

Eastern Europe

Nizhnekamskneftekhim Nizhnekamsk, Tartarstan 50

Oltchim Rimnicu Vilcea, Romania 10

Sodaso Tuzla, Bosnia 22

ZC Rokita Brezg Dolny, Poland 25


Dow Chemical Freeport, Texas 685

Plaquemine, Louisiana 290

Aratu, Brazil 200 

HICI¤ Port Neches, Texas 181

Lyondell Bayport, Texas 562

Channelview, Texas 544

Far East

Asahi Glass Kashima, Japan 100

BASF/Shell Singapore 250*

Nihon Oxirane Chiba, Japan 164"

SK Oxichemical Ulsan, Korea 140^

Shell/Mitsubishi Chemical Singapore 140

*end 2001 +to 200 by Q3 2000 ^expansion to 200 planned "expansion to 172 by October ±Onstream from 1 October this year ¤ Huntsman/ICI jv@expansion by 160 planned for 2000 >end 1999 onstream  to 250 in October

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