Propylene serves as an essential raw material for various petrochemical intermediates and polymers such as polypropylene, petro-based polyesters, acrylonitrile, and others. Propylene is a valuable chemical commodity used in paints, coatings, inks, automotive parts, and consumer goods such as food packaging, upholstery, clothing, carpets, and toys. A rise in the consumption of a wide range of propylene-based end-use applications, including polypropylene across industries like automotive, construction, packaging, electronics, among others has augmented the global market.
The global Propylene Market is estimated to be valued at US$ 170 billion in 2023 and is expected to exhibit a CAGR of 10% over the forecast period 2024 to 2031, as highlighted in a new report published by Coherent Market Insights.
Market key trends:
One of the major trends gaining traction in the propylene market is increasing capacities and supply from major refineries and projects. Companies are undertaking significant capacity expansions and investments in new propylene plants to meet the rising demand. For instance, Dow Chemical is increasing its propylene production capacity at its Texas operations facility by 500,000 tons per annum. Shell is also constructing a world-scale, low-carbon propylene and derivative chemicals production facility in Pennsylvania, with start-up expected in 2023. Such developments are expected to bolster the supply capacity to cater to the growing consumption. Another key trend observed in the market is the increasing focus on low-carbon and sustainable propylene production through emerging technologies like petrochemical integration with renewable feedstocks and advanced recycling processes. This is anticipated to support the decarbonization of propylene supply over the forecast period.
Porter’s Analysis
Threat of new entrants: The threat of new entrants into the propylene market is moderate. Large capital investments are required to set up production facilities which act as a barrier. However, there are low switching costs for buyers which can facilitate entry of new players.
Bargaining power of buyers: The bargaining power of buyers in the propylene market is high. Buyers can negotiate prices downward as propylene has substitutes. Buyers also have fair knowledge about industry pricing.
Bargaining power of suppliers: The bargaining power of suppliers is moderate. Major suppliers have established themselves however production flexibility of buyers allows them to shift between suppliers keeping their power in check.
Threat of new substitutes: The threat of substitutes is low to medium. Propylene has few substitutes like butylene however propylene is preferred due to its properties and versatility. New product development can pose a threat.
Competitive rivalry: The competition in the market is high due to presence of major international players. Players compete based on pricing, product differentiation and customer service.
Key Takeaways
The global propylene market is expected to witness high growth over the forecast period of 2024 to 2031.
Regional analysis: North America accounts for the largest share in the propylene market owing to presence of major petrochemical industry. Asia Pacific is expected to grow the fastest during forecast period led by China and India where demand is rising rapidly.
Key players operating in the propylene market are LyondellBasell, ExxonMobil, SABIC, Total, Sinopec, BP, and Formosa Plastics. Key players are investing in capacity expansions to cater growing demand. They are also adopting strategies like mergers & acquisitions and partnerships for long term growth.
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