08 April 2002 00:00 [Source: ICB]European demand is weak and production rates have been cut. Players are hoping growth will recover in the second half of this year
Maleic anhydride (MA)'s main use, with over 50% of consumption, is unsaturated polyester resins (upr). The second biggest outlet, and the fastest growing, is 1,4 butanediol (BDO) and derivatives tetrahydrofuran (THF) and gamma-butyrolactone (GBL). Other uses for MA are in plasticisers, surface coatings, agrochemicals, lubricants, fumaric acid and malic acid. MA is available in either liquid (molten) or solid (flake) form.
The European market remains depressed with weak demand and structural oversupply. Operating rates have been cut to match reduced demand and some benzene-fed lines have stopped production. Less Asian imports are also present. Last year's slowdown deepened in quarter four and into quarter one and prices slumped by an average 10%. Demand growth in Europe last year for upr was at best flat or showed a slight decline, but is expected to recover this year and turn in growth of 1%. Players report no firm signs yet of any improvement in demand but are optimistic for a better second half year. BASF's acquisition of Sisas in July 2001 has also impacted the market, as improved operations at the plant in Feluy, Belgium, led to product appearing on the merchant market, pressuring prices and igniting fresh competition for sales. Completion of PPM Ventures' purchase of Lonza's polymer intermediates business has been delayed to first half 2002.
Europe settles contracts on both a quarterly and monthly basis. The first quarter contract is reported in the range E800-840/tonne with the March monthly settlement slightly lower. Producers will seek a price increase in April and quarter two to restore margins which are very low and have worsened recently as benzene feedstock costs soar. An initial second quarter benzene contract has settled, up by E161/tonne. Butane prices are also rising as crude oil and natural gas values move up.
MA is produced by the oxidation of benzene or butane. Although the butane-based process is said to have superior economics and is the preferred route, Lonza claims its fixed bed benzene route is competitive in low cost revamps and medium-sized plants. MA can be made from butane in either fixed or fluidised bed processes. Integrated butane-to-BDO technologies have been developed by Huntsman and BASF with Kvaerner, and BP/Lurgi. Scientific Design has developed chloride-free catalysts for MA production in fixed bed reactors. The catalysts are being toll-manufactured by Lonza. BOC Gases and Mitsubishi Chemical have developed a new technology, Petrox, which has been operated on a large-scale pilot plant in Japan. The process uses a selective hydrocarbon separation system to recover and recycle unreacted butane and allows MA to be produced at low butane conversion to maximise selectivity and yield. BOC claims reductions of 10% in capital costs and 20% in raw material costs.
MA occurs as white crystalline flakes which have a strong acrid odour. A decomposition-polymerisation explosion hazard can occur in the presence of alkalis at temperatures above 150ûC. MA is toxic and an irritant to the skin and mucous membranes.
Asia, particularly China, is the main region for future growth. Chinese demand for upr is rising and new upr plants are due to start production in 2002/2003, requiring more MA. The Middle East is also a growing market and Saudi Arabia and the UAE have increasing import requirements. Huntsman's joint venture MA/BDO plant in Saudi Arabia is due onstream in second quarter 2004, but its 41 000 tonne/year Mexican project, which was due end 2000, is now on hold. BDO growth is still forecast at double digit rates. Future plant closures in Europe are still considered a possibility.
|Ulsan, South Korea||8|
|Ashland||Neal, West Virginia, US||43|
|Bayer||Baytown, Texas, US||60|
|BP||Joliet, Illinois, US||45|
|Cray Valley||Drocourt, France||15|
|Grand Union||Lin Yuan, Taiwan||25|
|Huntsman||Pensacola, Florida, US||110|
|Korea PTG||Ulsan, South Korea||25|
|Orgachim JSC||Ruse, Bulgaria||1|
|Polioli, Italy||Vercelli, Italy||36|
|PT Justus Sakti Raya|
|Repsol YPF||Ensenada, Argentina||17|
|Shandong Shengli Oilfield Petrochemical|
|Lin Yuan, Taiwan||20|
|TCL Industries||Teluk Kalung, Malaysia||35|
|Ulsan, South Korea||40|
|Zaklady Azotowe Kedzierzyn|
* idled since Nov 2001Source: ECN/CNI
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