China Propylene Oxide Market: Capacity Growth, Trade and Demand

China's propylene oxide industry continued to expand in 2025, with rising production capacity, shifting trade dynamics, and sustained downstream demand shaping the market. At the same time, policy adjustments and changing feedstock costs are influencing the sector's outlook.

Capacity and Output Continue to Rise

China's propylene oxide production capacity maintained steady growth in 2025. The country added 1.16 million tons of new capacity, bringing total capacity to 9.21 million tons. Most of the newly added facilities were concentrated in North China, with production mainly adopting co-oxidation and direct oxidation processes.

Among China's propylene oxide production technologies, co-oxidation remains the dominant method with 4.98 million tons of capacity, accounting for 54.1% of the total. Direct oxidation capacity reached 2.8 million tons, representing 30.4%, while the chlorohydrin process accounted for 1.43 million tons, or 15.5% of total capacity.

China Remains a Net Importer Despite Falling Trade Volumes

China's propylene oxide market remained in a net import position in 2025, although both imports and exports declined significantly during the year.

Total imports reached 125,000 tons, a 53.0% year-on-year decrease, while exports totaled 9,200 tons, down 31.3% compared with the previous year.

Thailand remained the largest supplier of propylene oxide to China, exporting 64,000 tons, accounting for 50.8% of total imports at an average price of $949 per ton. Saudi Arabia ranked second with 34,000 tons (27.0%) at an average price of $897 per ton, followed by the United States, which supplied 19,000 tons (15.2%) at an average price of $909 per ton.

Ample Feedstock Supply Weakens Cost Support

Feedstock conditions also shifted in 2025. China's propylene supply increased steadily as the cost advantage of coal-to-propylene production became more evident and petroleum-based propylene capacity continued to be released.

As a result, propylene prices declined throughout the year, weakening cost support for the propylene oxide market.

Downstream Demand Continues to Expand

Demand for propylene oxide in China remains largely driven by downstream sectors such as polyether polyols, propylene glycol and its ethers, and dimethyl carbonate.

Among these, demand for polyether polyols continued to grow, supported by applications linked to energy-efficient buildings, lightweight components for new energy vehicles, and core materials for wind turbine blades.

New Export Tax Policy Announced

Policy developments are also affecting the industry. On January 9, 2026, China's Ministry of Finance and the State Taxation Administration jointly issued the Announcement on Adjusting Export Tax Rebate Policies for Photovoltaic and Other Products.

The policy includes products under HS code 39072990, covering other polyethers in primary forms. Starting April 1, 2026, the VAT export rebate for these products will be cancelled, potentially affecting related export activities in the sector.