Material Insights · Understanding the Material World

Propylene oxide and Styrene

The PO/SM process makes about 2.3 tonnes of styrene with every tonne of propylene oxide, so a weak styrene market can close propylene oxide capacity; routes such as HPPO that make no styrene avoid this tie.

Propylene oxide (chemical) and Styrene (chemical): 4 relationships.

How they are linked

1. PO/SM co-production

Joint production · Strong · One plant makes both in a fixed ratio

In the PO/SM route, ethylbenzene is oxidised to a hydroperoxide that transfers oxygen to propylene, making propylene oxide, and the leftover alcohol is dehydrated to styrene, so output of the two is locked together.

  • about 2.3 t styrene made per tonne of propylene oxide in PO/SM
  • 315 kt and 680 kt a year PO and styrene capacity of the Maasvlakte PO/SM complex, Europe's largest of its type

Because styrene is the larger output by volume, a PO/SM unit behaves like a styrene plant with a valuable propylene oxide side stream. The producer cannot raise propylene oxide output without also selling more styrene, so the weaker of the two markets limits how hard the plant can run.

Sources: Alliance Chemical; ICIS

2. Co-product credit

Cost and price · Strong · Styrene revenue sets PO/SM economics

The styrene sold from a PO/SM plant pays for much of its cost, so when styrene margins fall the effective cost of propylene oxide from this route rises.

  • December 2024 when production at the Maasvlakte PO/SM plant was halted
  • end of 2026 target for completing the closure

LyondellBasell and Covestro closed their Dutch PO/SM plant, about 300 kt a year of propylene oxide and 635 kt of styrene, citing global overcapacity, rising imports from Asia and high European costs. Production was halted in December 2024, which shows how co-product and regional margin weakness can remove propylene oxide supply.

Sources: ICIS; Chemical Week

3. HPPO and other routes

Substitution · Medium · Routes without styrene compete with PO/SM

Propylene oxide can also be made by the chlorohydrin route, with hydrogen peroxide (HPPO) or with cumene, and the HPPO and cumene routes produce essentially no co-product, so they free propylene oxide from the styrene market.

  • water the only co-product of HPPO
  • over 95% selectivity of the HPPO reaction
  • over 60% share of propylene oxide projects realised or announced since HPPO's 2008 start-up that used HPPO (2011 study)

HPPO needs a hydrogen peroxide supply, usually a dedicated plant on site, but avoids the chlorine waste of the chlorohydrin route and the styrene exposure of PO/SM. As new capacity uses HPPO, the share of propylene oxide tied to styrene falls, which weakens this pair's price link over time.

Sources: Alliance Chemical

4. Price link: co-product

Cost and price · Strong · Both ways

The PO/SM process makes propylene oxide and styrene together, and both depend on petrochemical feedstocks, so their prices share a cost base and a cycle.

  • 0.33 monthly change correlation
  • 0.80 12-month change correlation
  • 0.84 fitted elasticity

Yearly moves are closely tied while monthly moves are looser, which fits shared feedstock (propylene, benzene, ethylene) costs plus separate end markets: polyurethane foam for propylene oxide and polystyrene, ABS and rubber for styrene.

Sources: Material Insights (World Bank, FRED, IMF data)

For investors

Key learnings

  1. PO/SM plants make about 2.3 tonnes of styrene per tonne of propylene oxide, so styrene margins decide whether the propylene oxide is competitive.
  2. Styrene overcapacity has already closed Europe's largest PO/SM plant, removing about 300 kt a year of propylene oxide in 2024 to 2026.
  3. HPPO capacity, with water as its only co-product, makes propylene oxide supply less dependent on styrene over time.

What to track

  • Styrene margin over benzene and ethylene: A weak margin raises the risk of PO/SM cutbacks and propylene oxide tightness (Weekly · price reporting agencies)
  • PO/SM and HPPO capacity additions and closures: Shows how much propylene oxide is tied to styrene (Quarterly · company announcements)
  • Propylene oxide and polyol prices: Signals cost pressure for polyurethane foam makers (Weekly · price reporting agencies)

For policymakers

Key learnings

  1. Propylene oxide supply can fall because of weakness in a different product, styrene, so supply security reviews for polyurethane chains need to look at co-product markets.
  2. New propylene oxide capacity built on HPPO avoids both styrene exposure and the chlorine waste of the older chlorohydrin route.
  3. Closures in Europe driven by Asian overcapacity shift propylene oxide supply towards Asia, so importing countries, including India, should treat Asian PO/SM and HPPO capacity as their main supply signal.

What to track

  • Propylene oxide and polyol import volumes: Shows dependence on foreign PO/SM and HPPO plants (Monthly · national trade data)
  • Styrene and propylene oxide capacity in China: Overcapacity there sets world prices and closures elsewhere (Quarterly · industry reports)

Sources

  1. Propylene oxide routes: chlorohydrin, HPPO and glycol supply, Alliance Chemical
  2. Flagship Maasvlakte POSM plant to close in October, union, ICIS (2025)
  3. LyondellBasell, Covestro to close POSM plant in Netherlands, Chemical Week (2025)
  4. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)