Petchem 2001: Regional imbalances to remain in styrene

27 September 2001 13:00  [Source: ICIS news]

MONTE CARLO, Monaco (CNI)--Regional imbalances will remain a feature of the styrene market through to 2007, with North America and the Middle East having large surpluses and East Asia remaining short, predicted Lee Fagg of consultants Tecnon OrbiChem.

Fagg, who was speaking here on Thursday at the Petchem 2001* conference, said he expected North America to retain a export position for the present while the growth in consumption in China will absorb product from the Middle East.

Global styrene consumption is forecast by Tecnon OrbiChem to grow by around 4.1%/year over the 2001-2007 period, rising from 20m tonne this year to over 25m tonne by 2005. However, Fagg noted that there is little news of new capacity coming onstream after 2005 and operating rates are expected to increase from around 80% this year to over 95% by 2007, although any new projects announced in the next couple of years will lower this figure.

Looking at the styrene market by region, Fagg expected North American capacity to increase by 11% over the next five years from around 6.8m tonne/year up to 7.6m tonne/year. The most significant addition will be BP’s 600 000 tonne/year unit at Texas City, due onstream before 2004. Dow has postponed its 575 000 tonne/year propylene oxide/styrene monomer (PO/SM) plant planned for the Gulf coast and it is unclear whether this plant will be built in the US.

With the North American domestic market mature and consuming around 5m tonne/year, US Gulf coast producers have benefited from the export markets of Asia, Europe and South America. Fagg warned that there was a level of uncertainty as to the future for styrene exports: uncertainty over energy prices, a high level of competition from other regions and improved self sufficiency from traditional import markets are key threats.

South America accounts for just 2% of global production and 3% of world consumption, making it a net importer. Current capacity is around 600 000 tonne/year, spread between four producers. It has been reported that BASF and Dow will form a 50:50 joint venture to construct a 500 000 tonne/year plant in Brazil and this project, scheduled for 2005, is likely to go ahead, commented Fagg.

Europe will gain one new styrene plant, a 640 000 tonne/year PO/SM plant at Maasvlakte, Rotterdam that is being built as a joint venture between Bayer and Lyondell. After completion of this project, the European market will become long and European producers may need to export. Alternatively, older units typically located in Eastern Europe may close. Fagg also noted that previous sharp peaks in the European spot market, caused in times of product shortage, are likely to become a thing of the past.

Capacity in the Middle East and Africa accounted for 4% of the world’s total in 2000, significantly exceeding the regions' ability to consume styrene. Total styrene capacity is expected to double in the next five years to 2.7m tonne/year including the construction of three 500 000 tonne/year units by Sabic in Saudi Arabia, National Petrochemical Company (NPC) in Iran and Petrochemical Industries Co (PIC) in Kuwait. But a domestic market of only 1m tonne/year means that Middle East producers will be highly dependent on export markets, primarily Asia.

The styrene industry in Asia is extremely diverse, explained Fagg, dividing it into sub regions of Southeast Asia, Japan and East Asia including China. Styrene capacity is set to increase by 73% in Southeast Asia over the next few years with additions in Singapore and India. Consumption of styrene is forecast to increase by up to 43% by 2007 in Southeast Asia although from a relatively low base.

No new capacity is expected in Japan over the forecast period and the country is expected to remain long, relying on exports to Taiwan and more recently China.

East Asia and particularly China has become the single most important region for merchant styrene. Tecnon OrbiChem forecast growth of styrene consumption in China at 11-12%/year in the 1997-2007 period. China imports in excess of 3m tonne/year of styrene and its derivatives. However, only one world scale plant is expected to be built in China up to 2005 with further additions limited by the availability of ethylene, noted Fagg. This will lead to increasing imports of styrene.

*Petchem 2001 is organised by Tecnon OrbiChem and continues on Friday.

By: Peter Taffe
+44 20 8652 3214

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