With the start of production at Sinopec Shell Petrochemical's 60,000-ton propylene glycol plant, the domestic market has experienced significant shifts. The oversupply situation is now becoming more pronounced, reshaping the competitive landscape.
In 2004 and 2005, economic factors led to a decline in demand for propylene glycol from downstream industries, resulting in negative growth in apparent consumption. At the same time, domestic production capacity for dimethyl carbonate and propylene glycol co-generation systems expanded rapidly, boosting self-sufficiency rates. Producers in Shandong, Hebei, and Anhui began exploring export markets, with total exports surpassing 10,000 tons in 2005. However, Shell entered the Chinese market relatively late and held a small market share, making the timing of its new plant seem less than ideal.
Currently, China primarily uses the propylene glycol/dimethyl carbonate co-generation process, which offers cost advantages over the环氧 propane (epoxy propane) method. In 2005, domestic production via this method reached 55,000 tons, mainly concentrated in Shandong, Hebei, and Liaoning. Despite this, China still imports around 80,000 tons annually, mostly from the U.S., South Korea, Singapore, and Japan.
According to statistics, China’s apparent consumption of propylene glycol was 123,000 tons in 2005, with the past two years showing stable levels between 120,000 and 130,000 tons. With slow domestic demand growth, future consumption increases are expected to be modest. Additionally, propylene glycol currently accounts for only 7.7% of propylene oxide consumption in China, far below the global average. Analysts predict that by 2006, the proportion will rise significantly, reaching 112,000 tons by 2010—over 10% of total propylene oxide consumption.
The launch of Sinopec Shell’s 60,000-ton project will boost domestic production, potentially shifting the market away from imports. However, Shell’s limited market presence and the opening of Japanese projects may reduce the utilization rate of the new facility. Domestic dimethyl carbonate plants still hold cost advantages, and by the end of 2005, their total capacity had exceeded 120,000 tons, with continued growth expected.
In short, the next few years will see intense competition in the domestic propylene glycol industry. As local production increases, imported products will gradually lose ground. Japanese company NOC already faced sales challenges in 2005, and this trend is unlikely to change soon.
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