Product Profile: Epichlorohydrin

20 October 2003 00:00  [Source: ICB]

New capacity in Taiwan has backed out exports and plants have closed. Asian epoxy demand will drive future growth

Epichlorohydrin (ECH) is mainly used in epoxy resins, which account for up to 75% of output. Synthetic glycerine is an ECH 'sink' allowing integrated players to use spare capacity to run synthetic glycerine plants independently of the natural glycerine market, and exit or substitute the natural product whenever epoxy demand requires. Glycerine can run to 10-15% of demand while other end uses, such as water and paper treatment resins, and elastomers, account for the remainder.


Global demand is assessed by Tecnon OrbiChem to have recovered to some 920 000-940 000 tonne/year, following the serious dip in demand to around 840 000 tonne in 2001 after years of steady growth. World capacity is estimated at 1.24m tonne/year with an occupancy of about 75%, although real utilisation, discounting idled capacity and scheduled downtime, may be nearer 87%.

The world share of the three majors, Dow Chemical, Resolution and Solvay, has dropped from 65% to 60% (and to 50% if Dow's idled US unit is permanent). Nan Ya has also joined the world ranks in volume terms. Most of the recent recovery has come from improved epoxy resin demand growth in Asia, notably China, while water treatment and paper processing resin demand has shown steady global growth. US demand was 330 000 tonne in 2002 and may approach 340 000 tonne in 2003. Net exports dipped last year to 33 000 tonne. This was partly due to Dow's idling of 90 000 tonne/year in the US because of the loss of Asian export markets resulting from Nan Ya's new plant in 2001, and some improvements in Chinese operating efficiency.

US net exports in the first half of 2003 are down further at just under 15 000 tonne. West European demand is hovering around 250 000 tonne/year. Japanese demand is fairly stagnant at 95 000-100 000 tonne/year. Its loss of epoxy resins sales together with lost ECH exports due to Taiwan's new self-sufficiency, were behind the exit decisions of Showa Denko and MTT. China has been importing more, about 50 000 tonne/year, but at very low prices which has disadvantaged Japanese producers with their relatively high chlorine costs.


Current US contract prices are $1280-1340/tonne FD, equal to $1200-1300/tonne (€1050-1150/tonne) FD in Europe, and $1050-1100/tonne cif Asia. Present spot offers in Asia are $1000-1050/tonne. Domestic Chinese product was said to be offered at $800-850/tonne FD in early 2003, but prices have recovered now to over $920/tonne.


ECH is essentially a derivative of propylene and chlorine that combines the reactivity of an epoxide group (an oxygen bridge) with the additional reactivity of a chloro-group on to a propylene backbone. There are two production routes to ECH: via allyl chloride or allyl alcohol. Over 90% of global capacity is based on allyl chloride which offers better economics if the site is fully integrated with incineration and co-product hydrochloric acid demand. The allyl alcohol route was developed by Showa Denko, which sold its business and intellectual property to Daiso in early 2003 and closed its 24 000 tonne/year plant.


Global demand growth in Europe and the US has faltered and may broadly follow GDP rates. Japanese growth will probably be flat, while in other parts of Asia growth of 5-6%/year is expected from the epoxy sector. By 2008, demand should be approaching 1.15m tonne/year based on 4-5%/year global growth and representing utilisation of nearly 90%. However, synthetic glycerine might take up to 100 000 tonne/year of this demand unless it is cut back to allow consumption in the more profitable resin sectors.

Qilu Petrochemical is considering adding an 80 000 tonne/year unit at Fushan, Liaoning, China. Three other allyl alcohol-based plants are being studied in China, but process owner Showa Denko's withdrawal from the sector puts a question mark over the route's competitiveness. Dow has had plans for a 110 000 tonne/year plant in China, but, with its idling of capacity in the US and without obvious chlorine and propylene integration, the project appears remote. India's Tamilnadu Petroproducts is studying an expansion of 5000 tonne/year to 15 000 tonne/year at Manali. Saudi Arabia's NAMA has further delayed its new 30 000 tonne/year plant at Al Jubail to 2006.

David Sherry in association with Tecnon OrbiChem provided this report. Contact

Major global ECH capacity*, '000 tonne/year

Company Location Capacity

Asahi Glass

Kashima, Japan 50


Matsuyama, Japan** 17
Mizushima, Japan 33

Dow Chemical

Freeport, Texas, US*** 380
Stade, Germany 105


Yosu, South Korea 25


Sterlitamak, 30

Nan Ya

Mailiao, Taiwan 80

Qilu Petrochemical

Zibo, Shandong, China 32


Norco, Louisiana, US 100
Pernis, Netherlands 80


Daesan, South Korea 35


Rheinberg, Germany 52
Tavaux, France 32


Usti nad Labem, 13
Czech Republic


Niihara, Japan 15

Tianjin Bohai

Tianjin, China** 24


Irkutsk Oblast, CIS 25

Yueyang Petrochem

Yueyang, Hunan, China 24


Bydgoszcz, Poland 35

* excludes plants below 12 000 tonne/year

** based on allyl alcohol

*** one train idled

Source: David Sherry/Tecnon Orbichem

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