Propylene can be used to produce a wide range of chemicals, including acrylic acid, phenol, acetone, acrylonitrile, propylene oxide, glycol and oxo-alcohols. Propylene is produced in large quantities due to its broad industrial use.
Majority of the propylene produced in India, nearly 95 per cent, is converted into PP. India does have production units for phenol, acetone, oxo-alcohols and propylene oxide. However, these production units are small scale plants. In spite of increasing demand and imports of these chemicals, local manufacturers are hesitant or unable to carry out expansion activities because of lack of access to feedstock and financial support.
Greenfield projects in propylene derivatives have not been implemented due to lack of sufficient propylene (propylene not already being used for PP production) and irregular techno-economics.
The plants in countries of ASEAN and North East Asia that produce phenol and acrylic esters help meet majority of the Indian demand.
Investing in a plant in India doesn't seem beneficial. The lack of infrastructural facilities also deter investors.
The Middle East is also looking at expanding their petrochemical base by investing in downstream chemicals in order to manufacture value-added products. These investments are often in the form of collaborations between local firms that have access to feedstock and international companies equipped with the needed technologies.
In India, the issue of feedstock propylene is being addressed. Much of the propylene available at naphtha crackers and refiners is used to produce polypropylene.
There are several countries that have been facing shortage of propylene. Many nations are currently engaged in cracking lighter feedstock, which will reduce reliance on propylene. Investing in on-purpose propylene production is being considered by nations like China. In 2012, China used only two-third of the propylene produced, while the rest was utilized for production of chemicals.
Two on-purpose propylene production technologies namely propane dehydrogenation (PDH) and methanol to propylene (MTP), are being used to help refiners increase output.
The MTP technology uses coal for producing methanol through the gasification route. The methanol is then converted into propylene. MTP and methanol to olefins (MTO) provide a way to overcome challenges posed by availability of petroleum-based feedstocks and use coal, which is a more easily available resource.
Majority of the propylene produced by these on-purpose propylene plants will be used for PP production due to the ever increasing demand for polymer in China. These plants will also enable use of propylene at alternate sites for production of chemicals.
China is expected to witness a rise in MTP projects, majority of which are being set up in less industrialised northern and western parts of the nation.
PDH has had a slow start. There are a large number of projects being planned which could provide nearly 10 mtpa of propylene. This could lead to closure of certain old plants.
A MTO plant may not come up in India, unless the methanol is produced through gasification of cheap petroleum coke. IOC may set up such a project, but this could take years.
A PDH project is being planned at the Mangalore SEZ Ltd. The project would have to import LPG for cracking into propylene and butylenes. This project currently needs investors.
Thus, propylene availability will have to be increased by means of on-purpose technologies. Until then we will have to rely on imports.
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