With the commencement of the production of 60,000 tons of propylene glycol in the plant of Sinopec Shell Petrochemical, the propylene glycol market has undergone major changes. The oversupply has begun to take off.
In 2004 and 2005, due to factors such as the macro economy, the demand for propylene glycol in the downstream industries shrank, and the apparent consumption had a negative growth. The domestic production capacity and output of dimethyl carbonate/propylene glycol cogeneration devices have increased substantially, which has greatly increased the self-sufficiency rate of propylene glycol. Enterprises in Shandong, Hebei and Anhui have actively taken the road to export. The total export volume in 2005 exceeded 10,000 tons. As Shell entered the propylene glycol market in China relatively late and has a relatively low market share, the timing of its 60,000-ton propylene glycol plant seems to be somewhat inappropriate.
At present, China's propylene glycol is mainly based on the propylene glycol/dimethyl carbonate cogeneration process, and its production cost has a certain advantage over epoxy propane. In 2005, the production of domestic propylene glycol/dimethyl carbonate cogeneration method reached 55,000 tons, and the main producers were mainly concentrated in Shandong, Hebei, and Liaoning. Every year, China imports 80,000 tons of propylene glycol from abroad, mainly from the United States, South Korea, Singapore and Japan.
According to statistics, in 2005, the apparent consumption of propylene glycol in China was 123,000 tons; in the past two years, it has been at a level of 120,000 to 130,000 tons. Due to the slow growth of domestic demand for propylene glycol, apparent consumption growth will be less in the coming years. In addition, in the current consumption structure of propylene oxide, propylene glycol industry consumption ratio is only 7.7%, far below the global average; industry analysts predict that from 2006, the proportion of propylene glycol will be significantly increased, is expected to 2010 propylene industry consumption The total amount of propylene oxide will reach 112,000 tons, which will account for more than 10% of the total consumption of propylene oxide.
With the launch of the 60,000-ton propylene glycol project of China National Offshore Shell Co., Ltd., the domestic production rate of propylene glycol will increase substantially. Shell and BASF will change the situation of exporting propylene glycol from Singapore to the domestic market. However, due to Shell's relatively low market share of propylene glycol in the domestic market and the opening of the Japanese propylene glycol project, the production capacity of 60,000 tons of propylene glycol by China Shipping Shell will be greatly reduced. Secondly, domestic propylene glycol/dimethyl carbonate plant still has certain advantages in production cost. By the end of 2005, the total production capacity of dimethyl carbonate plant in China had exceeded 120,000 tons, and the production of co-produced propylene glycol would still increase steadily in the next few years.
In short, in the next few years, the domestic propylene industry is particularly fiercely competitive. In particular, imported goods will gradually be replaced by localization. The problem of slow sales of propylene glycol by Japan's NOC company has already appeared in 2005, and this situation will be difficult to change in the coming years.