Petchem '03: PO/SM losing favour to PO tech alternatives

26 September 2003 11:17  [Source: ICIS news]

MONTE CARLO, Monaco (CNI)--Propylene oxide/styrene monomer (PO/SM) plant technology is losing favour as companies strive harder to develop the next generation of PO technologies without co-products, an industry expert said here Friday.

 

“The race is on to develop the next generation of PO production technologies which are without co-products,” said Lee Fagg, a consultant with the UK’s Tecnon OrbiChem.

 

Fagg outlined his views in a presentation on the future of PO/SM technology, asking attendees at the consultancy's Petchem 2003 conference if they should consider PO/SM a “friend or foe”.

 

He said: “The hive of activity around co-product free PO technology has cast a shadow of doubt over the future for PO/SM plants. It is clear that this [PO/SM] technology is now becoming unfashionable.”

 

Fagg said he does not view the trend as the end for PO/SM. However, he expects new construction will be limited and region specific. He called the shift toward co-product free PO technology “good news” for both the PO and styrene markets because the trend will reduce production uncertainties.

 

He cautioned that producers might rekindle more interest in PO/SM technology if styrene margins show a “sustained improvement and demand catches up with supply”.

 

Fagg identified Asia – and China in particular – plus Latin America as regions boasting significant demand for both PO and styrene.

 

He presented a summary of projects moving quickly to shift to co-product free PO technology, citing the second quarter launch of the Nihon Oxiraine Lyondell-Sumitomo joint venture in Japan as the first to use cumene as a feedstock. He called it a “breakthrough” in direct and co-product free PO technology development.

 

In addition, he said Lyondell is developing another co-product free technology based on direct oxidation of propylene to PO with a pilot plant in operation. Fagg said Shell also has shown great interest in researching an alternative to PO/SM technology using cumene as a feedstock. BASF has joined forces with Dow Chemical to develop a co-product free PO technology using a hydrogen peroxide feedstock.

 

Fagg said co-product free PO technology offers the potential for several specific advantages, including lower construction costs, quick investment decision-making, cost advantages over other technologies and elimination of co-product marketing responsibilities. But he emphasised the operational cost advantage claim remains to be verified.

 

Although PO/SM economics are believed to provide the lowest cost styrene, Fagg noted that “this assumption is made from a styrene production point of view and is on the basis that the PO value obtained is credited back to the styrene cost”.

 

He said: “Determining styrene cash costs from PO/SM production is difficult and also extremely variable depending on the value assigned to PO.”

 

Fagg said PO/SM technology now enjoys 20% of the styrene market share - its largest share since the process was introduced 30 years ago . But Tecnon OrbiChem forecasts this share as a likely peak for the technology, predicting it will fall gradually in the next decade as producers turn toward more conventional projects.

 

Nevertheless, Fagg said this 20% share will leave PO/SM operations with a significant impact on global styrene supply.  Next year, he said, PO/SM plants will boast 5.25m tonne/year of styrene capacity.

 

He called PO/SM technology a suitable option only for companies with “a significant internal requirement for PO”.

 

Fagg said: “The market environment for styrene is influenced by the PO market and the influence has been magnified as more new PO/SM plant capacity has come onstream.”

 

Petchem 2003, which concludes today, is the 20th such annual conference sponsored by Tecnon OrbiChem as a prelude to the European Petrochemical Association (EPCA) annual meeting. The EPCA meeting is scheduled to begin here this weekend.

By: Gary Taylor
+1 713 525 2653

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