Propylene

05 July 1999 00:00  [Source: ICB]

The European propylene derivative markets are moving away from a net export to a net import position due to a lack of cost-effective propylene to support expansions.

Supply/demand

Western Europe's propylene supply and demand are roughly in balance. In 1998 demand for propylene in West Europe was about 13m tonne, according to CMAI, which compares to a total production capacity of around 14m tonne. About 75% of total supplies to the petrochemical market came from steam crackers, 24% from fluid catalytic cracking (FCC) units and 1% from propane dehydrogenation.

Uses

Propylene consumption is dominated by polypropylene (PP) which accounts for over 50% of demand. Other important derivatives are propylene oxide (10%), acrylonitrile (9%), cumene (7%) and oxo-alcohols (10%). However, the strongest growth in demand is for polypropylene; PP production growth rates in west Europe are expected to average around 4.1%/year. Most other derivatives are expected to grow at much slower rates, causing overall propylene demand growth to average just over 3%/year.

Pricing

Propylene contract prices in west Europe for quarter three have been agreed at E320/tonne, an increase of E70/tonne on quarter two. The higher European settlement reflects tight global supplies following a recent spate of planned and unplanned cracker outages, firm raw material prices and a recovery in pricing for the major derivative PP. Targor and Montell have been forced to cut back polymer production in response to the current propylene shortage.European spot prices are rising with June business for barge/pipeline polymer grade concluded at DM630-650/tonne FD. Similarly, in the US the benchmark contract price for polymer grade has increased to $298/tonne for June, supply remains tight and export availability limited. Asia is also short of propylene and is currently taking delivery of US and Libyan spot parcels. Price ideas for July cargoes have risen to $450/tonne CFR Asia for July.

Technology

The two main sources of propylene are from the steam cracking of liquid feedstocks such as naphtha and from off-gases produced in FCC units in refineries. Interest is growing in propane dehydrogenation in cases where LPGs are abundant and inexpensive. Much effort is being put into increasing propylene output from crackers and FCC units. The BASF-Fina cracker being built at Port Arthur, Texas, employs metathesis where ethylene and butene-2 are reacted to make more propylene. The Superflex process, originally developed by Arco Chemical and licensed by Kellogg Brown & Root, converts light hydrocarbons in the C4 to C8 range into a propylene-rich stream. Mobil has developed an olefins interconversion (MOI) technology that uses the ZSM-5 zeolite catalyst to convert C4s, light pygas and light naphtha into propylene and ethylene. The ZSM-5 catalyst can also be used as an additive to FCC catalysts to increase propylene yields. Deep catalytic cracking offered by Stone & Webster produces light olefins from heavy vacuum gas oils and de-asphalted oils.

Health & safety

Exposure to high levels of propylene can cause dizziness and light-headedness while very high levels can lead to death from a lack of oxygen. Contact with liquified propylene can cause frostbite. Propylene is a highly flammable gas and a fire hazard.

WEST EUROPEAN PROPYLENE CAPACITY, '000 TONNE/YEAR SOURCE : CMAI

Company	Location	Capacity
Agip	Priolo and Sannazzaro, Italy	187
AP Feyzin	Feyzin, France	179
Atochem	Carling and Gonfreville, France	515
BASF	Antwerp, Belgium; Ludwigshafen, Germany	785
Borealis	Porvoo, Finland; Sines, Portugal;
	Stenungsund, Sweden	495
BP Amoco	Baglan Bay, Grangemouth and Coryton, UK;
	Lavera, France; Rotterdam, Netherlands	620
BSL	Bohlen, Germany	230
Cepsa	Algeciras and Huelva, Spain	130
Conoco	Immingham, UK	100
Copenor	Dunkerque, France	185
Dow	Tarragona, Spain; Terneuzen, Netherlands	740
DSM	Geleen, Netherlands	545
Elenac	Wesseling, Germany	475
Elf	Donges and Grandpuits, France; Leuna, Germany	175
EniChem	Porto Marghera, Porto Torres,
	Gela, Priolo and Sarroch, Italy	1050
Erdölchemie	Cologne, Germany	505
Esso UK	Fawley, UK	180
Company	Location	Capacity
Exxon	Antwerp, Belgium; Augusta, Italy; Ingolstadt,
	Germany; Fos and ND De Gravenchon, France	643
Fina	Antwerp, Belgium	785
ICI	Wilton, UK	401
Lindsey Oil	Immingham, UK	140
Miro	Karlsruhe, Germany	280
Montell/Elenac	Berre, France	240
Naphtachemie	Lavera, France	490
North Sea	Antwerp, Belgium	640
Petrochemical Olefins
OMV	Burghausen, Germany; Schwechat, Austria	410
PCK	Schwedt, Germany	125
Polimeri Europa	Brindisi, Italy	210
Repsol Pet/	La Coruna, Puertollano
Repsol Quimica	and Tarragona, Spain	530
Ruhr Oel	Gelsenkirchen and Münchsmünster, Germany	825
RWE-DEA	Heide and Wesseling, Germany	340
Shell	Berre, France; Moerdijk, Pernis, Netherlands, Stanlow, UK	785
Total	La Mede and Dunkerque, France	140
Other		295
Total		14.4m

Outlook

The European market is shifting to become a consistent net importer of propylene. West Europe is also in transition from a net exporter of most propylene derivatives to a net importer of propylene derivatives, particularly polypropylene and acrylonitrile, says CMAI. The main reason for this is the limited amount of cost-effective propylene monomer here to support further propylene derivative expansions. Planned capacity additions between 1999 and 2002 should average about 400 000 tonne/year while total demand growth is expected to grow by over 400 000 tonne/year. BASF and Sonatrach are expected to commission Europe's second propane dehydrogenation unit in Tarragona, Spain, in 2001 with a nominal capacity of 350 000 tonne/year. Over 450 000 tonne/year of new purification splitter capacity is being built by Hellenic Petrol in Greece, OMV in Austria and Fina in Belgium. However, the majority of propylene capacity additions will occur as a result of debottlenecking of existing naphtha crackers. In 2000, Borealis, DSM, Ruhr Oel and Shell are all scheduled to expand existing sites.²1³

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