Product profile: Propylene oxide

19 August 2002 00:00  [Source: ICB]

Moderate growth is expected this year as markets improve. New technology developments are driving future investment decisions

Uses
Propylene oxide (PO)'s main consumer is polyether polyols which take 60% of output, followed by propylene glycol (PG) with 20%. Polyether polyols are used in reaction with MDI or TDI to make polyurethanes, while PG's major outlet is in unsaturated polyester resins. Other uses include propylene glycol ethers (3%), dipropylene glycol (2%), flame retardants, synthetic lubricants, oilfield drilling chemicals, butanediol, propylene carbonate, allyl alcohol, isopropanolamines, modified starches and textile surfactants.

Supply/demand
Markets were essentially flat in 2001, with low growth in Europe and Asia and a decline in the US. Global markets are seeing a slight pick up in demand this year, driven by improved economies and restocking. However, operating rates remain low.

In Europe, limited propylene feedstock supply from cracker outages reduced PO availability in the first half and tightened the market. Propylene availability is improving now and PO supply is becoming more balanced. Improved demand into polyols remains fragile. Players expect minimal impact from Lyondell's new 285 000 tonne/year unit due online in Botlek, Netherlands, in 2003. This will feed a 125 000 tonne/year butanediol plant recently commissioned at the site. Ellba Eastern's 250 000 tonne/year plant in Singapore started initial production in July.

 
Pricing
European prices have been edging upward since quarter two as producers push through increases in a bid to recover margins which have been badly hit by rising propylene costs this year. Prices for small to medium-size purchasers of E1130-1200/tonne FD NWE in early quarter two reached E1160-1220/ tonne by early August and firmer levels are expected to emerge this month.

Technology
PO can be made by chlorohydrin or hydroperoxide routes. In the older chlorohydrin process, propylene and chlorine react in the presence of water to form propylene chlorohydrin, which is reacted further with sodium or calcium hydroxide. In the PO/styrene monomer (POSM) route, ethylbenzene is reacted with oxygen to make ethylbenzene hydroperoxide and then with propylene to form PO. Phenylethylcarbinol coproduct is dehydrated to styrene. An alternative hydroperoxide route uses isobutane which makes a tert-butyl alcohol coproduct that can be converted to MTBE.

New technologies without coproducts are nearing commercialisation and research has focused on converting propylene directly to PO using a suitable catalyst and source of oxygen. Sumitomo's new process is being used in a new plant in Japan due to start up at the end of 2002. Routes based on the direct oxidation of propylene with hydrogen peroxide have been developed by Dow (EniChem), Degussa/Krupp Uhde, and BASF which is to jointly develop a hydrogen peroxide to PO (HP-PO) process with Dow. If the technologies develop as expected, then a world-scale plant could be online as early as 2006.

Health and safety
PO is a colourless liquid with an ether-like odour. It is very volatile and highly flammable and is a dangerous fire and explosion hazard. Inhalation can irritate the nose, throat and lungs and ingestion can cause severe burns. It can be absorbed through the skin with possible systemic effects. It is classed as a probable human carcinogen.

Outlook
European demand growth is put at 3-4%/ year with much stronger rates for Asia, particularly China which accounts for about 30% of Asian demand. Most new investment is targeted in China and Singapore. BASF will decide by 2004 on building a 250 000 tonne/year HP-PO plant. Asia and the Nafta region are tipped as likely locations and production could start in 2007. BASF has linked with Solvay to build the HP facility.

European PO capacity, '000 tonne/year
Company Location Capacity

Europe

 

BASF Ludwigshafen, Germany

125*

BP Cologne, Germany

200

Dow Stade, Germany

525

Ellba Moerdijk, Netherlands

250

EniChem Priolo, Italy

110

Lyondell Fos-sur-Mer, France

220

Rotterdam, Netherlands

245

Nizhnekamskneftekhim

Nizhnekamsk, Russia

50

Oltchim Rimnicu Vilcea, Romania

17

Polihem

Tuzla, Bosnia and Herzegovina

22

Repsol YPF Puertollano, Spain

70

Tarragona, Spain

150

Shell Moerdijk, Netherlands

200

ZC Rokita Brezg Dolny, Poland

25

Americas

 

Dow Aratu, Brazil

200

Freeport, Texas,US

645

Plaquemine, Louisiana,US

315

Huntsman Port Neches, Texas, US

230

Lyondell Bayport, Texas, US

600

Channelview, Texas, US

550

Asia

 

Asahi Glass Kashima, Japan

100

Baling Petrochemical

Yueyang, China

4

Ellba Eastern Singapore

250

Jin Hua Chemical Huludao, China

120

Jinling Petrochemical

Nanjing, China

35

Manali Petrochemical

Chennai, India

12

Nihon Oxirane Chiba, Japan

180

Seraya Chemicals

Pulau Seraya, Singapore

175

Shangdong Befar Binzhou, China

65

Shandong Dongda Zibo, China

40

Shanghai Gaoqiao Pudong, China

80

SKC Chemical Ulsan, South Korea

140

Southeast Electro-Chemical

Fuzhou, China

20

Tianjin Dagu Tianjin, China

60

Zhejiang Pacific Ningbo, China

20

* also includes butylene oxide

 

SOURCE: ECN/CNI




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