Global Propylene Oxide Market Outlook, 2030

Global Propylene Oxide Market consist a critical class of organic chemical compounds mostly used as intermediates in the production of polyether polyols, propylene glycol and other derivatives. downstream chemicals are essential for manufacturing polyurethane foams automotive parts, coatings, adhesives and a wide range of consumer and industrial products. Propylene oxide is produced via multiple technologies including chlorohydrin process, styrene monomer co product process and increasingly the environmentally preferred hydrogen peroxide to propylene oxide (HPPO) method. Urban expansion drives the need for durable, lightweight, and insulating materials, which propylene oxide-based products provide, making urbanization a pivotal factor in market growth. Current market trends include the rising demand for polyurethane foams used in furniture, bedding, and automotive interiors due to their insulating and lightweight properties, the push toward sustainable production methods like bio-based feedstocks and green catalysts, and the diversification of applications into pharmaceuticals, personal care, and food packaging. Innovations are also set to disrupt the market, particularly green chemistry approaches such as the hydrogen peroxide–propylene oxide (HPPO) process, alternative renewable feedstocks, and advancements in catalytic processes that enhance efficiency and reduce environmental impact. The regulatory landscape is complex, with stringent environmental regulations on emissions and waste disposal prompting manufacturers to adopt cleaner technologies, while international safety standards ensure the safe handling and transportation of PO. Additionally, certifications such as ISO and REACH compliance are increasingly crucial for market access, especially in Europe and North America. In January 2021, LyondellBasell Industries Holdings B.V. has expanded its existing relationship with Sinopec through the formation of a 50/50 joint venture, which will build a new propylene oxide and styrene monomer (SM) unit under the name Ningbo ZRCC LyondellBasell New Material Company Limited. Both joint ventures will cater to the rapidly growing Chinese market.

According to the research report “Global Propylene Oxide Market Outlook, 2030” published by Bonafide Research, the Global Propylene Oxide market is projected to reach market size of USD 33.05 Billion by 2030 increasing from USD 22.56 Billion in 2024, growing with 6.71% CAGR by 2025-30. The increasing demand for end-use products in the automotive chemical industries has led to an increase in the demand for propylene oxide derivatives. Propylene oxide derivatives provide superior properties and functionalities that make them preferable for various applications. For instance, propylene glycol (PG) is utilized as a humectant, solvent and antifreeze agent in food and beverage, pharmaceuticals, cosmetics, and personal care industries. Polyether polyols another propylene oxide derivative, are imperative in the production of flexible and rigid polyurethane foams with superior insulation and cushioning properties. The versatility and performance of these derivatives boost the adoption of propylene oxide market in different industries. The propylene oxide market has witnessed a growing interest to develop sustainable and environmentally friendly alternatives to traditional production processes. The global emphasis on enhancing agricultural productivity is fostering innovation in farming practices, including the use of advanced chemicals such as herbicides and insecticides. For instance, the chlorohydrin process and the PO/TBA (tert-butyl alcohol) process are the two primary methods of production, with the PO/TBA process gaining popularity due to its environmental advantages. Beyond traditional uses, emerging applications in pharmaceuticals, personal care, and food packaging are creating new growth avenues, while sustainability initiatives, such as bio-based feedstocks and improved catalytic processes, are aligning the market with global environmental goals. Strategic collaborations, joint ventures, and mergers among key players, including Mitsui Chemicals and SABIC, are strengthening market positions and driving innovation. Industry events and conferences, such as the Asia Petrochemical Industry Conference (APIC) and ICIS training seminars, provide stakeholders with insights into market trends, technological advancements, and networking opportunities, fostering knowledge exchange and business development.

Market Drivers

• Increasing Demand from Polyurethane and Propylene Glycol Applications: Propylene oxide serves as a vital raw material for producing polyether polyols, which are in turn used to manufacture polyurethane foams. These foams are widely employed in furniture, automotive, construction, and packaging industries due to their lightweight, insulating, and cushioning properties. Additionally, propylene oxide is converted into propylene glycol, a compound used in pharmaceuticals, personal care products, and food processing. The rapid growth of these end-use industries, especially in emerging economies, and rising urbanization are driving the demand for propylene oxide globally.
• Shift Toward Sustainable and Cleaner Production Methods: Traditional production methods of propylene oxide, such as chlorohydrin and hydroperoxide processes, are energy-intensive and generate hazardous byproducts. To comply with stricter environmental regulations and reduce operational costs, manufacturers are increasingly adopting greener technologies, such as the hydrogen peroxide to propylene oxide (HPPO) process. These methods reduce the use of chlorine, minimize wastewater generation, and improve overall sustainability, making the production process more environmentally friendly while meeting market demand for cleaner chemical products.

Market Challenges

• High Production and Raw Material Costs: Propylene oxide production relies heavily on propylene, which is derived from crude oil and natural gas. Fluctuating crude oil prices and supply chain disruptions lead to volatile raw material costs, affecting profitability. Manufacturers often struggle to pass these cost fluctuations to end consumers due to market competition, which can compress profit margins and create financial pressure.
• Global Overcapacity and Market Competition: The propylene oxide industry faces overcapacity issues in regions such as Asia, Europe, and the Americas. Excess supply relative to demand creates intense competition, driving down prices and reducing profitability for producers. Some plants have even been forced to shut down due to unsustainable operations, highlighting the challenge of balancing supply and demand in the global market.

Market Trends

• Advancements in Production Technology: The industry is witnessing significant technological advancements aimed at improving efficiency and sustainability. Modern propylene oxidation and HPPO methods offer higher conversion rates, better selectivity, and reduced environmental impact. These innovations enhance production efficiency, lower operational costs, and help companies align with global sustainability targets, making production more competitive and environmentally responsible.
• Regional Market Dynamics: The Asia-Pacific region dominates the global propylene oxide market due to its strong industrial base, expanding manufacturing sector, and growing consumption in automotive, construction, and packaging industries. In contrast, Europe faces challenges such as high energy costs, aging infrastructure, and intense competition, which have prompted some plant closures and the adoption of efficiency-focused production strategies. The regional variations in market dynamics shape investment decisions and strategic priorities for global producers.

The TBA (tert-Butyl Alcohol) co-product process is the largest in the global Propylene Oxide industry due to its cost efficiency, high yield, and established integration with downstream chemical production, making it preferred for large-scale commercial operations.

The TBA co-product process has established itself as the dominant method for producing Propylene Oxide (PO) globally, largely because it provides a strategic combination of economic efficiency, process reliability, and integration with downstream chemical industries. In this process, propylene reacts with organic hydroperoxides to produce Propylene Oxide alongside tert-Butyl Alcohol as a valuable co-product, which can itself be further converted into derivatives such as methyl tert-butyl ether (MTBE), a high-demand fuel additive. This dual-product capability significantly improves the overall economics of the manufacturing process, as producers can generate revenue not only from Propylene Oxide but also from the sale or utilization of tert-Butyl Alcohol. Additionally, the TBA co-product process has matured over decades, making it a proven, reliable, and scalable technology for industrial applications, with well-understood process parameters and lower operational risks compared to newer methods. Its widespread adoption is further supported by its compatibility with existing petrochemical feedstocks and infrastructure, especially in regions with substantial propylene availability, such as Asia Pacific and North America. The process also provides high selectivity and yields, which minimizes waste and enhances the overall efficiency of chemical production, a factor highly valued by manufacturers seeking cost optimization. Another reason for its dominance is the extensive integration with downstream products such as polyether polyols, epoxy resins, and propylene glycol, which are key derivatives in industries like construction, automotive, coatings, and packaging. By producing Propylene Oxide through the TBA co-product route, companies can easily link production to these derivative markets, creating a smooth supply chain and reducing reliance on external suppliers.

Polyether polyols dominate the global Propylene Oxide market because they are the primary intermediate in the production of polyurethane products, which are widely used across construction, automotive, furniture, and packaging industries.

The Polyether Polyols segment represents the largest application of Propylene Oxide (PO) globally, largely due to the extensive demand for polyurethane materials across multiple industrial and consumer sectors. Polyether polyols, produced through the polymerization of Propylene Oxide, serve as the fundamental building blocks for manufacturing polyurethanes, which are versatile polymers used in flexible and rigid foams, coatings, adhesives, sealants, and elastomers. Flexible polyurethane foams are widely utilized in furniture, bedding, automotive seating, and insulation, while rigid foams are essential in construction applications such as thermal insulation panels, refrigeration, and structural components. This broad spectrum of applications has created sustained and growing demand for polyether polyols, which, in turn, drives the demand for Propylene Oxide as a key raw material. The construction and automotive sectors are particularly significant contributors, as rapid urbanization in emerging economies and the expansion of automotive production globally necessitate large volumes of polyurethane materials for interiors, insulation, and safety components. Additionally, polyether polyols derived from Propylene Oxide offer customizable properties, including flexibility, durability, and chemical resistance, which allow manufacturers to tailor polyurethane products for specific applications, thereby further solidifying their market dominance. The growth of end-user industries, combined with rising consumer expectations for comfort, energy efficiency, and performance, has ensured that polyether polyols remain the preferred choice over other PO derivatives. Moreover, the production process for polyether polyols is well-established and scalable, allowing manufacturers to maintain consistent supply and meet the increasing global demand efficiently. Integration with other chemical processes, such as the use of Propylene Oxide in combination with other epoxides, also enhances the versatility of polyether polyols, making them a key focus for research and innovation within the polyurethane sector.

The Building & Construction sector is the largest end-user of Propylene Oxide globally because its derivatives, particularly polyether polyols, are essential for producing polyurethane-based insulation, foams, coatings, and adhesives used extensively in modern construction projects.

The dominance of the Building & Construction sector in the global Propylene Oxide (PO) market is primarily driven by the growing demand for energy-efficient, durable, and high-performance building materials, which rely heavily on PO derivatives. Propylene Oxide is a critical raw material for the production of polyether polyols, which in turn are used to manufacture polyurethane products such as rigid and flexible foams, coatings, adhesives, sealants, and elastomers. In construction, rigid polyurethane foams are particularly important for thermal insulation in walls, roofs, floors, and refrigeration systems, contributing to energy efficiency and sustainability an increasing priority in urban development and government building regulations. Flexible foams and elastomers are used in flooring, furniture, acoustic panels, and vibration-dampening applications, enhancing comfort and functionality in residential, commercial, and industrial spaces. The rapid urbanization in emerging economies across Asia Pacific, Latin America, and the Middle East has led to extensive construction activities, including residential complexes, commercial buildings, infrastructure projects, and industrial facilities, all of which significantly boost the demand for polyurethane materials and, consequently, Propylene Oxide. Additionally, ongoing renovations and the replacement of older building materials with advanced, lightweight, and high-performance polyurethane-based solutions in developed markets further contribute to steady consumption. Propylene Oxide’s versatility also enables the production of coatings, adhesives, and sealants that provide chemical resistance, durability, and weatherproofing properties highly valued in both new construction and refurbishment projects. Government policies and incentives promoting energy-efficient building materials, green construction practices, and compliance with environmental regulations further amplify the adoption of PO-based products in construction.

Asia Pacific dominates the global Propylene Oxide market due to rapid industrialization, growing demand from end-use sectors like polyether polyols and propylene glycol, and increasing chemical manufacturing capacity in countries such as China and India.

The Asia Pacific region has emerged as the largest market for Propylene Oxide (PO) primarily due to the region’s accelerated industrial growth, extensive chemical production infrastructure, and robust demand from key downstream industries. Countries like China, India, Japan, and South Korea are witnessing an expansion of manufacturing and construction activities, which directly boosts the consumption of Propylene Oxide derivatives such as polyether polyols, propylene glycol, and epoxy resins. These derivatives are widely used in producing polyurethane foams, coatings, adhesives, sealants, and elastomers, which are essential for automotive, construction, electronics, and packaging applications all sectors that are rapidly growing in the region. China, in particular, has seen significant government investment in industrial parks, petrochemical clusters, and downstream processing units, creating a dense network of facilities capable of large-scale Propylene Oxide production. Additionally, the availability of raw materials such as propylene from domestic refining and petrochemical industries provides a cost advantage and ensures a steady supply chain, reducing dependency on imports. The Asia Pacific region also benefits from favorable labor costs, relatively lower operational expenses, and government incentives aimed at boosting the chemical and manufacturing sectors, which collectively encourage the establishment of new PO production plants and expansion of existing capacities. Another contributing factor is the rising demand for consumer goods and infrastructure development, particularly in emerging economies like India and Southeast Asian countries, where urbanization and increasing disposable income drive consumption of products made with PO derivatives, such as flexible and rigid polyurethane foams for furniture, insulation, and packaging.

• July 2024: JAY Chemical Industries commissioned a new specialty chemicals plant in Saykha, near Dahej. The facility specializes in the production of derivatives based on ethylene oxide and propylene oxide, mainly for textile additives and various industrial uses. JAY Chemicals, a worldwide frontrunner in reactive dyes, seeks to improve product efficiency across various sectors with this latest initiative.
• May 2024: Chandra Asri purchased Shell's Bukom assets located on Jurong Island, comprising a refinery and a petrochemical facility that manufactures more than 2 million tons of ethylene, propylene, and their derivatives. This action bolsters the supply of propylene oxide in Southeast and Northeast Asia, lessening reliance on imports. Enhanced agreements with local crude suppliers might boost margins and stabilize propylene oxide production in the area.
• April 2024: KBR and Sumitomo Chemical revealed a partnership, naming KBR the sole licensing partner for Sumitomo's environment-friendly Propylene Oxide by Cumene (POC) technology. This technology provides significant yields, lowers carbon emissions, and lessens wastewater, supporting worldwide sustainability objectives. KBR will leverage its expertise to deliver this advanced solution to a global user base.
• March 2023: LyondellBasell launched the largest propylene oxide and tertiary butyl alcohol (TBA) facility globally in Texas, boasting an annual capacity of 470,000 metric tons of propylene oxide and 1 million metric tons of TBA. The facility supports products like polyurethane foam, detergents, and insulation while incorporating energy-efficient innovations.
• June 2022: a licensing agreement was signed between Indorama Ventures Public Company Limited (IVL) and Shandong Binhua New Material Co., Ltd., a Befar Group affiliate, for the construction, ownership, and operation of a co-production facility for propylene oxide (PO), t-butanol (TBA), and t-butyl methyl ether (MTBE). The business will be able to generate 800,000 tons of butane isomerization, 600,000 tons of propylene, 150,000 tons of synthetic ammonia, 240,000 tons of propylene oxide, and 742,000 tons of MTBE, annually. Show more