Product Profile: Benzene

05 May 2003 00:00  [Source: ICB]

Last year was a time of recovery and fundamental change in Europe. Producers continue to grapple with market volatility and unpredictability

Uses

Benzene's main consumer, taking about 53% of output, is ethylbenzene/styrene, followed by cumene/phenol with about 18%, then cyclohexane and aniline/nitrobenzene. It is also used in the production of maleic anhydride, alkylbenzenes and chlorobenzenes.

Supply/demand

Benzene markets recovered last year after a disastrous 2001. However, in Europe, 2002 was marked by a high degree of unpredictability and volatility, as well as some fundamental changes in market dynamics, as an alternative pricing scheme emerged. Demand has been fairly strong in the first quarter but is now slowing, particularly from styrene, where producers are said to be cutting back output as downstream polymer markets slacken. Phenol and cyclohexane demand is still reported to be healthy.

Supply is improving and returning to balance after a tight first few months due to turnarounds and production problems. The resulting spike in spot prices has attracted imports from the US and Korea for arrival in late April or May. Shell started up a new extraction unit in Moerdijk, the Netherlands, in late 2002. It closed a 80 000 tonne/year plant in Berre, France, at the end of February.

Pricing

 
European second quarter contracts have initially settled at E525/tonne, up E70/tonne from quarter one, although some buyers are still resisting. Monthly contracts were agreed at E548/tonne in April, up from E525/tonne for March. Support has gathered behind the monthly settlement which has been in place since early last year. However, big consumers are still opting for the stability of a quarterly agreement and both systems continue to run in parallel.

Spot levels peaked at $650/tonne in March after a quarter of very volatile feedstock prices. Latest spot deals were reported at $320-335/tonne fob NWE, having dropped sharply from $420-430/tonne a week earlier. The spread with naphtha has also improved. With naphtha continuing to weaken, reaching $210-215/tonne in late April, and benzene contracts at $562/tonne, the delta has widened to over $300/tonne.

Technology

The main source of benzene production in Europe is from pyrolysis gasoline (pygas) co-produced in the steam cracking of naphtha, gasoil or condensates to make olefins. Another source is the selective disproportionation of toluene, where benzene is co-produced in the manufacture of a paraxylene-rich xylenes stream. Hydrodealkylation of toluene is a third process and units are normally run to maintain the balance of supply. However, this is a high-cost route and benzene prices need to be high enough to encourage production. Benzene is also co-produced in BP/UOP's Cyclar process, which converts butanes and propanes to aromatics.

Health and safety

Benzene is a clear, highly flammable liquid. Flashback is a hazard because of its heavy vapours. It is acutely toxic and vapour can be absorbed through the lungs or skin. It is a cumulative poison, which builds up in the blood and tissues and is a suspected carcinogen.

Outlook

There is plenty of capacity available to meet demand which is growing at about 2%/year in Europe, and 3-4%/year globally. CMAI predicts world demand to reach over 40m tonne in 2007, a rise of 7.5m tonne on 2002. Europe will see increased consumption from Lyondell's 640 000 tonne/year styrene unit in Rotterdam, the Netherlands, which is due online in the second half of this year.

Western Europe will remain a net importer. The Middle East will remain a major supplier and will increase its exports to the region by over 100 000 tonne by 2006. New capacity is due onstream in Iran and Kuwait in 2005 but, from 2006, new derivative plants are scheduled to start production and exports from the Middle East will decrease.

 


WEST EUROPEAN BENZENE CAPACITY, '000 TONNE/YEAR
Aral Gelsenkirchen, Germany 200

Atofina

Carling, France 320
Feyzin, France 110
Gonfreville, France 200

BASF

Antwerp, Belgium 250
Mannheim, Germany 320

Borealis

Porvoo, Finland 130

BP

Grangemouth, UK 295
Koln, Germany 240

Cepsa

Algeciras, Spain 245
Huelva, Spain 170

ConocoPhillips

Immingham, UK 200

Dow Chemical

Bohlen, Germany 320
Terneuzen, Netherlands 915

EniChem

Porto Torres, Italy 160

Erdol-Raffinerie-Emsland

Lingen, Germany                  75

ExxonMobil

Botlek, Netherlands 600

FinaAntwerp Olefins

Antwerp, Belgium               170

Gexaro*

Lavera, France 200

Huntsman Petrochemicals

Wilton, UK                            435

OMV

Burghausen, Germany 160

PCK

Schwedt, Germany 70

Petrogal

Oporto, Portugal 80
Polimeri Europa Porto Marghera, Italy 110
Priolo, Italy 440
Sarroch, Italy 50

Repsol YPF

Puertollano, Spain 125

Ruhr Oel

Gelsenkirchen, Germany 370

Sabic EuroPetrochemicals

Geleen, Netherlands         350

Shell

Godorf, Germany 510
Moerdijk, Netherlands 500
Stanlow, UK 240
Shell & DEA Oil Heide, Germany 120
Wesseling, Germany 160

TotalFinaElf

Antwerp, Belgium 250
Gonfreville, France 160

VFT Belgium

Zelzate, Belgium 60

* Atofina/BP

Source: ECN/CNI




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