The propylene carbonate market is estimated to be valued at USD 423.78 Bn in 2024 and is expected to reach USD 621.5 Bn by 2031, growing at a compound annual growth rate (CAGR) of 5.62% from 2024 to 2031. The propylene carbonate market is expected to witness positive trends over the forecast period. Several factors are influencing this growth, including rising demand from the electronics industry and growth in lithium-ion battery manufacturing.

Market Driver - Rising Demand from Pharmaceutical Industry

The global pharmaceutical industry has experienced healthy growth over the past few years with increasing investments in research and development (R&D) activities across major economies. Pharmaceutical manufacturers are constantly focusing on developing new and improved formulations to cater to unmet medical needs. Propylene carbonate has emerged as one of the preferred solvents owing to its favorable solvent properties.

Leading pharmaceutical companies have strengthened in-house R&D centers with expanded facilities and laboratories. Advanced analysis and product development require large quantities of solvents like propylene carbonate. Rising investments in generics and biosimilars production have also stimulated the demand in the propylene carbonate market.

Stringent regulations pertaining to environmental protection and occupational safety are further propelling the shift from conventional petrochemical solvents to safer alternatives like propylene carbonate. With new drug approvals and special grant programs, the pipeline of pharma products in clinical trials remains robust. This will continue supporting the consumption of propylene carbonate in laboratory-scale as well as commercial-scale formulation and synthesis activities.

Market Driver - Increasing Use in Lithium-Ion Battery Production

The rapid adoption of electric vehicles (EVs) across the globe is a major factor augmenting the demand for lithium-ion batteries. Energy storage being crucial for wider electrification, battery manufacturers are ramping up production capacities to cater to growing needs. This, in turn, is positively influencing the propylene carbonate market for battery components and raw materials.

As a critical input, propylene carbonate plays an indispensable role in the manufacturing of lithium-ion batteries. During battery assembly, propylene carbonate is used as an electrolyte solvent that facilitates smooth ion transfer between the anode and cathode. Through uniform solvation, it enables lithium-ions to shuttle back and forth efficiently while electricity is being drawn from or returned to the battery.

Global EV sales are forecasted to see massive growth over the next decade. As lithium-ion battery mega factories and giga factories proliferate worldwide, their collective consumption of propylene carbonate is projected to rise substantially. This will continue to drive growth of the propylene carbonate market in the coming years.

Market Challenge - High Initial Investment Costs in Production Infrastructure

One of the key challenges faced by players in the propylene carbonate market is the high initial investment costs associated with setting up production infrastructure for propylene carbonate. Propylene carbonate is produced through a chemical synthesis process involving propylene oxide and carbon dioxide. The production facilities require specialized high-capacity chemical reactors, distillation columns, storage tanks and other ancillary equipment.

Establishing such a production line from scratch entails a major capital expenditure running into tens of millions of dollars. The costs are further increased by strict safety and environmental standards that need to be adhered to due to the volatile nature of the raw materials and intermediates used.

The high upfront capital requirement poses a major barrier to entry for new players in the propylene carbonate market. It prevents small and mid-sized companies from actively participating in the propylene carbonate market. Major manufacturers strive to improve capacity utilization levels to achieve economies of scale and maximize returns on their investments.

Market Driver - Expanding Applications in Cosmetics and Personal Care Industries

One of the key opportunities for growth in the propylene carbonate market is the expanding applications in the cosmetics and personal care industries. Owing to its properties, propylene carbonate finds increasing usage in formulation of various skincare products like moisturizers, makeup removers, anti-aging creams and hair care products. It is also used as a solvent for colorants and preservatives in cosmetics. The rising focus on natural and eco-friendly ingredients in cosmetic products is driving demand for propylene carbonate.

Additionally, the rapid growth of the cosmetic industry across developing regions of Asia Pacific and Latin America due to improving spending power and changing lifestyles is fueling propylene carbonate market growth. Leading personal care brands are actively sourcing propylene carbonate to develop new product lines, thus creating sustained demand from this application segment.

Strategic expansion to capture new markets: Dow Chemical expanded its production capacity for propylene carbonate in China by 40% in 2017 to cater to the growing demand from domestic lithium-ion battery and polyurethane markets.

Product innovation and collaboration: In 2015, BASF partnered with Chinese polymer producer Wanhua Chemical to develop new grades of propylene carbonate for use as a functional solvent in lithium-ion battery electrolytes and polyurethane.

Forward integration into downstream applications: In 2012, LyondellBasell invested $100 million to expand its propylene carbonate derivatives production facility in Germany. This allowed the company to forward integrate into the production of lithium battery electrolytes and polyurethane chemicals.

Focus on emerging markets and applications: LiaoNing Oxiranchem focused its marketing efforts on the rapidly developing Indian and Chinese markets for lithium-ion batteries during 2010-2015. It also increased R&D investment to develop specialized grades for new applications like separators and lithium iron phosphate cathodes.

Insights, By Application: Solvent Dominates Propylene Carbonate Applications

The solvent segment accounts for 42.8% share of the propylene carbonate market in 2024, owing to its widespread use across many industries. Propylene carbonate is a highly popular and effective solvent due to its favorable properties such as low volatility, high boiling point, and solvent power for both polar and nonpolar compounds.

In the paints and coatings industry, propylene carbonate has emerged as an important replacement for toxic solvents such as methylene chloride. Automotive coatings represent a major market as the drive for more sustainable yet high-performance coatings increases. Within the cleaning products segment, propylene carbonate finds application in products like household cleaners, electronics cleaners, and industrial degreasers. Electronics manufacturers favor propylene carbonate-based cleaners for their ability to remove residues without damaging delicate components.

Overall, the dominant use of propylene carbonate as an effective yet safer replacement for conventional solvents in various applications across industries will continue driving propylene carbonate market.

Insights, By End Use: Paints and Coatings Lead Propylene Carbonate End-use Markets

Of all the end uses, paints and coatings account for 30.1% share of the propylene carbonate market globally. Within the architectural coatings segment, propylene carbonate features in decorative and protective paints utilized in construction applications. Its ability to deliver vibrant color combined with durability has made it a popular co-solvent for a variety of paint chemistries. Growth in the construction sector especially in developing economies is propelling the use of propylene carbonate-containing paints and coatings. The maritime coatings market as well represents an area of increasing opportunity given propylene carbonate's good performance in harsh, corrosive environments.

While paints and coatings dominate propylene carbonate consumption currently, its use in other end-use industries is expanding steadily. Applications in cleaning products, pharmaceuticals, cosmetics, and energy storage media are helping diversify the end-use portfolio. Overall, the rising need for sustainable yet high-quality coatings solutions across various markets will continue propelling the leadership of the paints and coatings industry in driving propylene carbonate market globally.

• The Asia Pacific region is anticipated to exhibit the highest growth rate in the propylene carbonate market. Factors contributing to this include rapid industrialization, increased electronics manufacturing, and growing investments in renewable energy sectors.
• The adoption of propylene carbonate as a solvent in the paints and coatings industry is increasing due to its low volatility and high solvency power, which enhance product performance and application efficiency.
• Propylene carbonate market's growth is anchored by applications in paints, coatings, and pharmaceuticals. AI integration further enhances production efficiency and creates avenues for optimization.

The major players operating in the Propylene Carbonate market include BASF SE, Huntsman International LLC, Lyondell Basell Industries, Tokyo Chemical Industry Co., Ltd. (TCI), Shandong Feiyang Chemical Co., Ltd., Dhalop Chemicals, Carl Roth, Linyi Evergreen Chemical Co., Ltd., Empower Materials, Central Drug House, Mitsubishi Chemical Corporation, Solvay S.A., Eastman Chemical Company, and Shenzhen Capchem Technology Co., Ltd.

• In 2023, BASF completed the construction of a production facility in Harjavalta, Finland, which supplies precursors for cathode active materials. This positions BASF as the first cathode active materials supplier with local production capacities in key markets: China, Japan, North America, and Europe.
• In August 2023, Tesla entered into a multi-year agreement with Eastman Chemical to supply propylene carbonate for use in electric vehicles. This collaboration underscores Tesla's commitment to sustainable transportation by securing essential materials for EV production.

• By Application
  • Solvent
  • Electrolyte
  • Catalyst
  • Additives
  • Cleaners
• By End Use
  • Paints & Coatings
  • Pharmaceuticals
  • Cosmetics & Personal Care
  • Textile
  • Energy & Power