CHAPTER II

Market Analysis and Trade-offs

Market Analysis of Propylene

Propylene has been one of the highest chemical produced globally as well as a major

product of the petrochemical industry. This chapter presents the market survey and trade-offs

regarding the production and consumption of propylene in various sectors.

As of 2019, propylene is the second, largest, volume chemical produced globally. It is an

important raw material for the production of organic chemicals such as polypropylene,

acrylonitrile, propylene oxide, and oxo alcohols, as well as for a large variety of industrial

products. Global consumption of propylene will continue to grow during 2019-24, driven

primarily by the developing markets in Asia, particularly China. Propylene consumption varies

by region, based on the development of downstream derivative capacity.

Figure 2.1

World consumption of propylene-2019

 With fast growing global requirements on purpose, propylene facilities continue to be

developed to supplement the traditional production routes (ethylene crackers and refineries).

Changes in fuel consumption, cracker feed, and new regulations such as IMO 2020 are

projected to modify the propylene production pattern in the medium term.

Competitors identified in this market include:

 BASF SE

 BP Europa SE

 China National Petroleum Corporation (CNPC)

 China Petroleum & Chemical Corporation (SINOPEC)

 Dow Inc.

 Exxon Mobil Corporation

 LyondellBasell Industries NV

 SABIC (Saudi Basic Industries Corporation)

According to the article “Propylene: 2019 World Market Outlook and Forecast up to 2028 “

by Merchant Research and Consulting Ltd.(July, 2019), the following are the Propylene market

trends, developments and prospects:

 Polypropylene (PP) industry consumes about 70% of all propylene produced

 PP market has been in a good stage and supported good growth rates of its upstream

 Besides traditional propylene production methods, new on-purpose technologies have

penetrated the market; among them are propane dehydrogenation (PDH), methanol to

olefins (MTO), methanol to propylene (MTP)

 The share of propylene produced with on-purpose technologies is expected to increase

(up to 30% of world output)

  China will introduce considerable on-purpose propylene capacity to become self-

sufficient in propylene supply

 Overall propylene market is expected to post good growth rates with Asia Pacific being

the leader

Figure 2.2 Global Propylene Demand by Application

Acrylonitrile

Acrylonitrile (AN) is one of the leading chemicals with a worldwide production of about 6

million tonnes in 2003. The most important applications are acrylic fibers, thermoplastics (SAN,

ABS), technical rubbers, adiponitrile, as well as speciality polymers. About 90% of the worldwide

acrylonitrile (AN) is manufactured today by the ammoxidation of propene.

Major uses for acrylonitrile are as a monomer in polyacrylonitrile for acrylic fibers, in

acrylonitrile-butadiene-styrene (ABS) and styrene-acrylonitrile (SAN) resin manufacture as a

modifying monomer, and as a chemical intermediate in the manufacture of adiponitrile and

acrylamide. Acrylonitrile is used in production of acrylic fibers, ABS, SAN and nitrile-butadiene-
rubber (NBR). With acrylic fibers are leading with 38% of world acrylonitrile consumption, and

ABS/SAN resins accounting for the second-largest end use for acrylonitrile, the market has

continued to grow. The majority of ABS/SAN growth has taken place in Asia, driven by the fast-

growing electrical appliance and automotive industries as new consumer populations move from

agrarian environments to the cities.

The Global acrylonitrile market was valued at USD XX billion in 2014 and is projected to

reach USD XX.XX billion by 2020, at a CAGR of 3.5% during the forecast period from 2015 to

2020. Asia-Pacific, with a CAGR of 4.7%, will continue to be the leader in acrylonitrile

consumption. European and North American regions are estimated to show a moderate growth.

Total production capacity of ACN was estimated to be 6.9 million tonnes. Asia-Pacific accounts

for over half of the global production capacity. China and USA have the highest installed

capacities.

Figure 2.3 Market Summary of Acrylonitrile

 As presented in Figure 2.3, Asia-Pacific is expected to dominate the global market

during the forecast period. Propylene as one of the derivatives of acrylonitrile is also expected to

have greater demands in the Asia-Pacific Industries.

Propylene Oxide

The market trend for the Propylene Oxide is expected to reach USD 22.10 Billion by

2026 from USD 12.82 Billion in 2016 at a CAGR of 5.6%. Rising use of polyurethanes in

sealants, thermal insulators, and flooring materials will drive market growth. Growing automotive

sector in various countries including in China, Mexico, the U.S., and India is expected to

increase market penetration over the projected period. Propylene oxide as a chemical

intermediate to produce elastomers, adhesives, flexible and rigid foams, coatings, and injection

moldings, which find wide applications in gasoline tanks, tub-shower combinations, and boat

hulls. Rising consumption of the product in the production of substances including propylene

glycols, polyalkylene glycols, and propylene glycol ethers will supplement market expansion.

High consumption in defoamers, lubricants, oil-field chemicals, greases, wetting agents, latex

paints, and water scavengers will augment industry-penetration.

 Figure 2.4 Global Propylene Oxide Market Size Through 2016 to 2026 (in USD Billion)

As shown in Figure 2.3, the gradual increase of market size of propylene oxide from

2016 to 2026 is driven by the rising use of polyurethanes in sealants, thermal insulators, and

flooring materials which were derived from propylene oxide. In addition, this also calls out for the

rising consumption of propylene in order to produce propylene oxide.

Propylene oxide market based on production process has been segmented into

chlorohydrin process, hydrogen peroxide process, styrene monomer process, TBA co-product

process and cumene-based process. Chlorohydrin process is holds the major share of market

and hydrogen peroxide process segment is expected to grow at a high CAGR during the

forecast period. Polyether polyol segment based on application is expected to grow at a high

CAGR attributed to the increasing demand for polyurethane foams from several end-use

industries, such as building & construction, automotive, textile & furnishing and packaging.

Geographically, the propylene oxide market based on North America, Europe, Asia

Pacific, Middle East & Africa and Latin America. Asia Pacific is expected to be one of the largest

markets for propylene oxide.

Polypropylene

Polypropylene is currently one of the fastest growing polymers and also has the largest

demands of propylene. Polypropylene is made from the polymerization of propylene gas in the

presence of a catalyst system, usually Ziegler-Natta or metallocene catalyst. Polymerization

conditions (temperature, pressure and reactant concentrations) are set by the polymer grade to

be produced. Superior barrier properties, high tensile strength, better surface finish, and low

cost allows polypropylene to be an ideal product for numerous packaging applications.

 Increasing demand for polypropylene from the packaging industry is estimated to

stimulate market demand according to GLOBE NEWSWIRE (Aug. 01, 2019). The global

polypropylene market is expected to reach USD 155.57 Billion by 2026, according to a new

report by Reports and Data. Polypropylene is the second-most commonly produced plastic, in

terms of volume, after polyethylene. The global production of polypropylene resin is 56.0 Million

Metric Tons in 2018 and is projected to reach around 88.0 Million Metric Tons by 2026, growing

at a rate of approximately 5.7%. Much of this growth is attributed to polypropylene’s ability to

displace conventional materials (wood, glass, metal) and other thermoplastics at lower cost.

Polypropylene (PP) is a tough, rigid plastic and produced in a variety of molecular weights and

crystallinities.

Polypropylene Market

Polypropylene Market was valued USD 80.82 Billion in 2018 and is expected to reach

USD XX Billion by 2026 at a CAGR of XX %. Polypropylene is one of the most highly consumed

polymer resin globally due to its superior quality, chemical resistance, toughness, fatigue

resistance. Polypropylene applications include packaging for consumer products, plastic parts in

different industries such as automotive, building & construction and electrical & electronics.

Figure 2.5

Polypropylene

Market by Type
 Polypropylene market based on types has been divided into homopolymer and

copolymer. Homopolymer type of polypropylene is expected to be one of the major contributors

for the market due to high strength to weight ratio and is stiffer than copolymers. Polypropylene

market based on application is categorized into injection molding, fiber & raffia, film & sheet and

blow molding. Injection molding is expected to hold one of the largest shares of the market for

polypropylene owing to the various properties of polypropylene including excellent moisture

resistance, chemical resistance and high impact strength it is majorly used in the injection

molding application. Packaging is the expected to grow at a high CAGR during the forecast

period among end-use industries. This is due to its properties like high temperature resistance,

flexibility, excellent optical clarity and low moisture vapour transmission. Owing to which

polypropylene is used for packaging in various industries including food, beverages, health care,

cosmetics and others.

Geographically, Asia Pacific is expected to be one of the largest markets for

polypropylene during the forecast period. China is expected to hold largest shares of the market

in Asia Pacific during the forecast period. Increasing concern over environmental impact and

disposal of plastics is expected to restraint the growth of this market.

Based on Figure 2.4, the growing demands of polypropylene in the recent years up to

the future also indicates the greater demands of propylene as raw material for polypropylene

worldwide.

Petrochemical Industries in the Philippines and the Propylene Production and

Consumption
 Growth in the domestic resins market is prompting oil and petrochemical producers in

the Philippines to consider investment in downstream industries.  Petron Corporation and JG

Summit Olefins Corp. (JGSOC) are manufacturers that produce monomers such as ethylene,

propylene, benzene, toluene and mixed xylene. Petron supplies 100% of its propylene

production to its sister company, Philippine Polypropylene Inc. which produces polypropylene

resins. While the naphtha cracker of JGSOC supplies the ethylene and propylene monomer

requirements for the PP and PE plants of JGSPC. The four other polymer producers are: NPC

Alliance (then Bataan Polyethelene), Philippine Propylene (then Petrocorp), Philippine Resins

Industries and Chemrez Technologies. The resins are then sold to manufacturers who fabricate

these into various industrial and consumer products for several industries.

Plans revealed recently include Petron's indication that it would resurrect plans for a PP

plant at Mariveles, in Bataan, with a capacity of 160,000tpa PP, expandable to 225,000tpa. The

industry is also attracting investors such as JG Summit Holdings planning a US $700 million

naphtha cracker at the Batangas complex. However, until a domestic olefins source is
developed, the main weakness in the Philippines' petrochemical industry will remain its

dependence on imported ethylene and propylene, as well as aromatics and their derivatives.

The main players involved in this sector are Petron Corporation, Shell Philippines,

Chevron Malampaya, Mc Ren International Ventures, Inc., NPC Alliance Corporation (NPCA).

The PNOC Petrochemical Development Corporation (PPDC) is currently developing a

petrochemical industrial estate located in Limay and Mariveles Bataan. With an area of about

500 hectares, the complex is envisioned to house the first world-class petroleum complex in the

country.

The total petrochemical investment in the country is estimated to exceed USD 2 billion

with over 2,808,600 MT per year total capacity in polymer production. JGSOC has the biggest

investment share for all the seven major petrochemical plants in the Philippines, with USD 800

million initial investments. Current capacities are as follows:

Table 2.1 Petrochemical Plants Currently Operating in the Philippines

COMPANY PRODUCT CAPACITY PLANT

LOCATION
Philippine PP 160,000 MT Bataan
Polypropylene, Inc.
(PPI)
JG Summit PP 175,000 MT
Petrochemical PE 180,000 MT Batangas
Corporation
NPC Alliance PE 250,000 MT Bataan
Philippine Resins PVC 100,000 MT Bataan
Industries, Inc. (expandable to
200,000 MT)
Chemrez PS 30,000 MT Quezon City
Technologies, Inc. Unsaturated 10,200 MT
Polyester (UPH)
Polymer Emulsions 14,400 MT
Methyl Ester 60,000 MT
Propylene 140,000 MT
 Petron Corporation Benzene 20,000 MT Bataan
Toluene 150,000 MT
Mixed Xylene 220,000 MT

Source: Petrochemicals Roadmap

The petrochemical industry uses the following raw materials:

Table 2.2 Raw Materials of Petrochemical Industry

Raw Material Usage Source

Ethylene For the production of JGSPC
PE
Propylene For the production of JGSPC
PP
Styrene For the production of Taiwan
PS
Vinyl Chloride For the production of Japan, Taiwan
PVC

Table 2.3 Gross Value Added (GVA, in million pesos)

Year 2013 2014 2015 2016
GVA (chemicals & 184,363 191,229 220,901 240,265
chemical products)
Total Manufacturing GVA 1,538,913 1,666,515 1,760,988 1,883,922
% Share to Total Mfg. GVA 11.98 11.47 12.54 12.75

Source: PSA

TRADE PERFORMANCE (EXPORTS AND IMPORTS)

Table 2.4. Exports [Free on Board( FOB Value), US$]

2012 2013 2014 2015 2016

 66,713,791 49,661,339 37,361,719 191,362,560 150,438,045

Source: PSA, as processed by DTI-EMB (as of 1 April 2016)

Table 2.5 Exports by Product [Free on Board( FOB Value), US$]

PRODUCT 2012 2013 2014 2015 2016

PE 38,748,773 15,391,011 5,622,479 110,755,741 93,225,744
PP 5,606,788 7,207,276 12,521,442 69,435,630 44,870,763
PS 2,653,507 2,484,759 850,217 731,551 673,666
PVC 19,704,723 24,578,293 18,367,581 10,439,638 11,667,872
Source: PSA, as processed by DTI-EMB

Table 2.6 Top 10 Export Markets (2016) [Free on Board( FOB Value), US$]

MARKET EXPORTS
Indonesia 41,136,636
Belgium 33,105,673
China 22,483,185
Vietnam 16,706,228
Malaysia 8,611,906
Portugal 4,976,185
Israel 4,035,687
Slovenia 2,888,604
Japan 2,781,380
Myanmar 2,471,341

Source: PSA, as

processed by DTI-EMB

Table 2.7 Imports [Free on Board( FOB Value), US$]

2012 2013 2014 2015 2016

583,685,992 565,244,562 1,014,045,66 572,998,679 739,329,872
4
Source: PSA, as processed by DTI-EMB
Table 2.8 Imports by Product [Free on Board( FOB Value), US$]

PRODUCT 2012 2013 2014 2015 2016

PE 271,351,489 275,295,861 527,139,252 302,404,767 352,646,094
PP 180,061,567 162,930,487 312,118,263 145,650,001 172,859,100
PS 94,288,786 89,328,953 115,141,623 85,463,307 131,147,188
PVC 37,984,150 37,689,261 59,646,526 39,480,604 82,677,490
Source: PSA, as processed by DTI-EMB

Table 2.9 Top 10 Suppliers of Philippine Imports (2016) (in FOB Value, US$)

SUPPLIER IMPORTS
Thailand 167,802,854
Singapore 164,999,766
Malaysia 101,677,605
Taiwan ( Rep. of China) 52,187,796
Japan 51,057,386
South Korea 40,905,151
Saudi Arabia 35,206,061
Qatar 27,902,756
China, People’s Republic of 21,851,918
Indonesia 20,352,261
Source: PSA,

as processed by DTI-EMB

Based on the Petrochemical Industry Roadmap, the industry emphasized the importance

of the full integration of the petrochemical industry which includes the expansion of naphtha

production and diversification of petrochemical products, so as to help in achieving inclusive

growth and sustainable socio-economic development. The need for the petrochemical industry

integration is seen vital as there are gaps in the supply value chain that needs to be filled in.

The midstream petrochemical industry has 8 industry players which provide the needs of

its downstream plastics industry consisting of more than 100 players. Due to the insufficient

supply of raw materials, the downstream industry is forced to import its requirement. Local plastic

makers still import more than half of their raw materials from outside the region because of
unsteady supply of raw materials from Asean and local sources. Therefore, a supply chain gap in

the midstream petrochemical exists; and this will be partly addressed by the naphtha cracker as

it will produce polyethylene (PE) and polypropylene (PP).

Market Price of Propylene

Figure 2.6 Global Annual Propylene Prices

As supply length pushed spot prices to levels not seen since the end of 2016, US propylene

exports have increased through the first four months of 2019, according to data from the US

International Trade Commission. Volumes mainly headed to Latin America, and market participants

have said they expect this to continue throughout 2019.

Meanwhile, the Asian market will focus on startups, with more than 1.2 million mt/year of extra

propylene production capacity expected to come online in China by H2.This includes China's Fujian

Meide Petrochemical's 660,000 mt/year PDH plant in September and Dongguan Juzhengyuan's
600,000 mt/year PDH plant by the end of H2. The additional capacity could reduce Chinese reliance on

imported cargoes and exert pressure on spot price.

Sources of Propylene

Raw

It is widely recognized that naphtha steam crackers are the largest current source of

propylene. The yield of propylene from a naphtha cracker is approximately half the yield of

ethylene because ethylene has historically averaged a higher market price than propylene. The

two main sources of propylene are as a byproduct from the steam cracking of liquid feedstocks

such as naphtha as well as LPGs, and from off-gases produced in fluid catalytic cracking (FCC)

units in refineries. The remainder of propylene is produced using on-purpose technologies such

as propane dehydrogenation (PDH) and metathesis.

The primary source of propylene is from cracking naphtha and other liquids such as gas

oil and condensates to produce ethylene. By altering the cracking severity and the feedstock
slate, the propylene:ethylene ratio can vary from 0.4:1 to 0.75:1. Smaller amounts of propylene

can be obtained from cracking propane and butane. The cracking of liquid feedstocks is carried

out predominately in Europe and Asia but less so in the Middle East and North America.

The main on-purpose process used is propane dehydrogenation (PDH) but it is only

economically viable in cases where low-cost LPGs are available. Propane is converted to

propylene at 500-700oC in a reactor containing a nobel metal catalyst.

Although PDH technology is reasonably well established, the main criticisms of this route

are relatively high capital costs and the need for a long-term, low-cost supply of propane such

as available in the Middle East. New processes are being developed that claim to lower both

capital and operating costs.

Technologies for Propylene Production

A. Propylene from Propane via Dehydrogenation

Dehydrogenation is an endothermic equilibrium reaction that involves the

elimination of hydrogen (H2). It is carried out in the presence of heavy-metal catalyst,

Chromium(Cr) for example. The following equation shows the propane dehydrogenation

reaction:

Propane Dehydrogenation Reaction

In this process, about 86% (by weight) of propane is converted to propene. The propene

yield is favored by higher temperatures and lower pressures. Higher process

temperatures result to an increase in propene yield. To mitigate cracking reactions,

dehydrogenation reaction in this technology occurs in temperature ranges between 580

and 650 °C and pressures slightly below atmospheric. Further information about the

thermophysical property data for this process is shown in Table 2.1

Figure 2.1: Commercial process flow diagram (Dehydrogenation)

 Figure 2.2: Detailed process flow diagram (Dehydrogenation)

Process Description of Propylene Dehydrogenation

The dehydrogenation process is used to supply polymer-grade propylene from

propane to meet the rising propylene market. It is independent of a steam cracker or

Fluid Catalytic Cracking (FCC) unit. It provides a dedicated, reliable source of propylene

to give more control over propylene feedstock costs.

The process flow diagram (Fig 2.2) consists of a reactor section, product

recovery section and catalyst regeneration section. Hydrocarbon feed is mixed with

hydrogen-rich recycle gas and is introduced into the heater to be heated into the desired

temperature (over 540 °C) and then enter the reactors to be converted at high mono-

olefin selectivity. Several inter-stage heaters are used to maintain the conversion

through supplying heat continuously since the reaction is endothermic. Catalyst activity

is maintained by continuous catalyst regenerator (CCR) or shutting down reactors one

 by one and regenerating the reactor by the regeneration air, the continuous catalyst

regenerator is where the catalyst is continuously withdrawn from the reactor, then

regenerated, and fed back to the reactor bed.

Reactor effluent is compressed, dried and sent to a cryogenic separator where

net hydrogen is recovered. The olefin product is sent to a selective hydrogenation

process where dienes and acetylenes are removed. The propylene stream goes to a de-

ethanizer where light-ends are removed prior to the propane-propylene splitter.

Unconverted feedstock is recycled back to the de-propanizer where it combines with

fresh feed before being sent back to the reactor section.

Table 2.1: Physical And Chemical Properties Of Reactant And Product For Dehydrogenation
Reaction
REACTION PROPANE  PROPYLENE HYDROGEN

Properties

Molecular formula C3H8 C3H6 H2

Molar mass 44.1 g/mol 42.08 g/mol 2.016 g/mol

Appearance Colorless gas Colorless gas Colorless gas

Odor Odorless Gassy/ aromatic Odorless

3
1.81 kg/m , gas
Density 2.0098 mg/mL (at 0 0.08988 g/L (at 0 °C,
(1.013 bar, 15 °C)
°C, 101.3 kPa) 101.325 kPa)
613.9 kg/m3, liquid
Melting point −187.7 °C − 185.2 °C -259.16 °C

Boiling point −42.25 to −42.04 °C; − 47.6 °C -252.879 °C

highly insoluble in
Solubility in water 40 mg L−1 (at 0 °C) 0.61 g/m3
water
853.16 kPa (at 21.1
Vapor pressure 144.06 psia 100kPa (at 20 ºC)
°C)
 Thermochemistry

Std enthalpy of −105.2 to −104.2

+20.41 kJ/mol 0
formation ΔfHo298 kJ/mol

Std enthalpy of −2.2197 to −2.2187

-2058.4 kJ/mol -285.84 kJ/mol
combustion ΔcHo298 MJ/mol

To screen out whether this reaction will bring profit or not, the gross profit is calculated as

shown below:

C3H8  C3H6 + H2

C3H8 C3H6 H2

lbmol 1 1 1
Molecular weight 44.09 42.08 2.016
lb 44.09 42.08 2.016
lb/lb of propylene 1.0478 1 0.048
PHP/lb 5.72 27.28 138.23

Gross profit for reaction path 1 = 27.28(1) + 138.23 (0.048) – 1.0478(5.72) = 27.92PHP/lb

propylene