Propylene production in the United States will increase in 2019

Recent declines in crude oil costs and the start-up of new cracking units will increase propylene production in the United States in 2019, although export and unplanned shutdowns may cause some volatility in the market.


For most of 2018, tight supply of propylene in the United States led to higher prices. Propylene prices in the United States rose sharply in early 2018 due to unplanned shutdowns of some propane dehydrogenation (PDH) plants. For most of the second half of 2018, propylene prices in the United States rose due to the failure of some PDH units and the limited production of propylene in cracking units.

Although production of PDH units in the United States may continue to be unstable in 2019, propylene production from cracking units rebounded at the end of 2018, a trend that is likely to continue until 2019.

For most of 2018, propylene production in the cracking unit decreased, mainly due to the increased use of ethane raw materials in the cracking unit, which limited the production of propylene by-products.

With the new cracking plant in the United States put into operation in March and July 2018, domestic ethylene supply in the United States increased dramatically, leading to a sharp drop in ethylene prices.

Low ethylene prices have squeezed the profit margins of American cracking plants, prompting them to use more ethane, which is the most economical raw material for ethylene production. For most of 2018, strong crude oil prices supported the prices of heavier raw materials such as naphtha, propane and butane, which often made cracking heavier raw materials uneconomical.

In mid-2018, ethane accounted for more than 75% of the raw materials of cracking plants in the United States, up from 60% in the previous year.

At the end of 2018, the price of crude oil fell and the profit margin of cracking unit increased, which improved the economy of heavy cracking raw materials. Crude oil prices are not expected to rise substantially in 2019, which may maintain the economic feasibility of heavy cracking raw materials.

Due to the strong demand for U.S. fuel exports, especially for Mexico, U.S. refineries will maintain a high start-up rate in 2019, so propylene production from refineries is expected to remain strong.

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