Worldwide demand for propylene to rise to 130 million tonnes by 2023, says IHS

Demand for propylene is estimated to grow to 130 million tonnes worldwide by 2023, rising from the current 90 million tonnes, according to the latest data from the IHS Chemical North American Propylene Supply Study.

 

The report said that the increase in demand for propylene is driving the need for on-purpose propylene production and the trend is expected to continue until 2023.

 

Propylene, which is a key chemical building block, is primarily produced as a co-product in steam crackers and is a by-product in refineries. Propylene is used in a wide variety of applications, including the production of polypropylene plastics such as films and packaging.

 

In 2013, on-purpose propylene production accounted for 12% of worldwide propylene production, compared to 3% in 2003.

 

By 2023, approximately 30% of global propylene production will be on-purpose, which is derived from metathesis and propane dehydration processes, IHS said.

 

IHS Chemical global olefins senior director and author of the study Chuck Carr said: "Looking forward, propane dehydration is expected to be the most significant source of increasing global on-purpose propylene production, and will be the process most likely employed in the United States, the Middle East and Asia for this production."

 

Increased use of cheaper natural gas liquids over oil as a feedstock in North America has led to lower propylene production as a co-product by the steam crackers.

 

Carr said: "The increasing need for on-purpose production of propylene is primarily being driven by two factors: first, the changing feedslates in North American petrochemical production, which are getting lighter due to more ethane being used versus naphtha; and second, the decline in North American gasoline demand as automobile CAFÉ standards are implemented."

 

North America is expected to represent around 15% of the worldwide supply by 2023, of which five million tonnes would be from on-purpose production.

 

Carr said: "48% of the world's production comes from steam crackers, but in North America, the majority of propylene, or 70% of production, is produced by refineries.

 

"Just 26% of North American production is derived from steam crackers because of their shale gas-based natural gas liquid feedstocks."

 

The US and Middle East will use domestic, low-cost propane for on-purpose propylene production, while China will use imported propane.

 

Carr added: "Coal-to-olefins technologies in China are also expected to be a significant source of on-purpose supply growth.

 

"China will add significant on-purpose capacity, which will result in global oversupply, leading to the weakening of Asian (and therefore, global) propylene prices, which will increase the cash-costs of ethylene from naphtha crackers around the world."