Aromatics '03: Industry cautious on PX investments
18 November 2003 10:37 [Source: ICIS news]
THE HAGUE, Netherlands (CNI)--Industry is likely to exercise prudence when investing in new paraxylene (PX) projects despite the considerable demand growth predicted for this purified terephthalic acid (PTA)/polyester feedstock, argued Gordon Haire, business development manager at BP Chemicals.
Haire, who was speaking here Tuesday at the opening of the Second Aromatics & Derivatives Conference*, noted that making xylenes was expensive and the $8bn (Euro6.80bn) investment since the mid-1990s has shown minimum returns.
He showed that global polyester demand is forecast to grow at an average of 7% a year with fibre demand in China being the main driver. In addition, container resin demand was also growing strongly in Europe and the US.
The present overcapacity in PX will be worked off, said Haire, but it may happen more quickly than expected. Utilisation rates could be capped at 90%, a figure expected to be reached by 2005.
The reason given by Haire was a feedstock choke caused by reformer utilisation rates limited to an average of 80% due to a number of reasons related to technology, age of equipment, feedstock slate, gasoline regulations and seasonality.
Haire added that there are few merchant PX projects - listing three in Iran, Kuwait and Indonesia - and these will be insufficient to close the supply gap. In China, there is very little additional PX capacity planned in comparison to a large number of PTA projects.
New PX projects will be built but Haire noted that there is a strong regional bias to Asia driven by China and he questioned where the feedstock will come from. Haire added that speculative projects for the merchant market are still problematical.
* The Second Aromatics & Derivatives Conference, organised by ICIS-LOR, International eChem and European Chemical News (ECN), continues tomorrow. ICIS-LOR and ECN are part of the same publishing group as CNI.
By: Peter Taffe
+44 20 8652 3214
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