Market Overview:

Propylene oxide is a colorless liquid that is soluble in organic solvents and water. It is commonly used to produce polyether polyols for flexible and rigid foams, as well as solvents and chemicals.

Market Dynamics:

Propylene oxide market is expected to witness significant growth over the forecast period owing to rising demand from building and construction industry. The growing construction activities around the globe has increased the demand for polyether polyols and polyurethane flexible foams which finds wide application in insulation in buildings. Furthermore, expanding automotive industry has also augmented the consumption of propylene oxide based polyurethane flexible foams for manufacturing automotive interiors and seats. Rapid industrialization coupled with supportive government policies for infrastructure development especially in emerging economies like China, India are projected to boost the market growth of propylene oxide in construction industry during the forecast period.

Major Driver - Growing Demand from Polyurethane Production

Propylene oxide is a key intermediate raw material used in the production of polyurethane. The polyurethane market has been experiencing strong growth rates in recent years due to the increasing use of polyurethane foams in various end-use industries such as construction, transportation, packaging, electronics, and furniture. Polyurethane foam finds widespread use as insulations in construction, upholstery in automotive and furniture industry, and packaging industry. This rapid growth in the consumption of polyurethane globally is expected to drive the demand for propylene oxide over the forecast period.

Major Driver - Increasing Use in Propylene Glycol Production

Propylene glycol is another derivative of propylene oxide that finds application as industrial antifreeze and de-icing solutions, solvents for paints and lacquers, unsweetened alcohol substitute in beverages, etc. It is also used in pharmaceuticals and cosmetic products. The growing demand from these end-use industries is likely to fuel the consumption of propylene oxide in the production of propylene glycol. Moreover, propylene glycol is gaining popularity as a humectant in food products such as candies, candy coating, dried fruit, pet foods, etc. which is further anticipated to boost the propylene oxide market.

Major Restrain - Stringent Regulatory Environment Regarding VOC Emissions

Propylene oxide is considered a volatile organic compound (VOC) and its production and use are strictly regulated by various government agencies and regulatory bodies across major economies due to emitted VOC's harmful effects on the environment and human health. The US Environmental Protection Agency (EPA) has imposed limits on the VOC emissions from propylene oxide manufacturing facilities. Similar regulatory norms have been introduced by European Union (EU) and other regions to curb VOC emissions. The stringent regulatory environment regarding VOC regulations is expected to somewhat hamper the market growth of propylene oxide during the assessment period.

Major Opportunity - Increasing Investments in Bio-based Production Technologies

Considering the environmental hazards associated with petroleum-derived propylene oxide, industry players are actively investing in bio-based production technologies. Renewable feedstocks such as glycerin obtained as a by-product from biodiesel production can be used for the production of bio-based propylene glycol by introducing epichlorohydrin intermediate. This provides an opportunity for the industry to market more sustainable bio-based propylene oxide products and meet the growing consumer demand for green chemicals. Some leading companies have already started commercial production of bio-propylene oxide and the emerging eco-friendly production technology is likely to open new avenues of growth over the coming years.

Major Trends - Growing Adoption of Water-based Polyurethane Dispersions

Water-based polyurethane dispersions (PUDs) have emerged as promising substitutes for traditional solvent-borne polyurethane coatings and adhesives. They provide environmental-friendly and solvent-free formulations without compromising on performance. PUDs are finding increasing applications in wood coatings, leather finishing, textile coatings, automotive interiors, etc. Their rising adoption is attributed to benefits such as low VOCs emissions, high solids content, and fast drying properties. This trend indicates continued rise in polyurethane consumption and subsequently will augment the demand for propylene oxide in the foreseeable future.