Product Profile: PO

17 May 2004 00:01  [Source: ICB]

Healthy demand growth will need new capacity and producers are racing to develop the next generation of technologies
 
Uses

Propylene oxide’s (PO) main consumer is polyether polyols which takes about 60% of output, followed by propylene glycol (PG) with 21%. Other uses include the production of propylene glycol ethers, flame retardants, synthetic lubricants, oilfield drilling chemicals, butanediol, propylene carbonate, allyl alcohol, isopropanolamines, modified starches and textile surfactants.

Supply/demand

Demand in Europe is said to be stable with availability tight to balanced. Propylene feedstock has been short, forcing some PO producers to make spot purchases at prices well above contract levels, making PO production costs unsustainable. However, propylene availability is easing slightly now.

Industry figures show that the west European market grew by 5% in 2003, although some players believe growth to be a more moderate 2-3%. East European growth, particularly for polyols, is higher, albeit from a small base.

Pricing

European merchant PO prices have gained an average €30-40/tonne in quarter two and the pre-discounted range is quoted at €1160-1220/tonne. However, margins are still being squeezed by the steep rise in propylene feedstock costs, with contract prices seeing a €50/tonne increase in both quarter one and two, as well as soaring spot values.

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.

New technologies without coproducts are nearing commercialisation and most ­efforts have focused on converting propylene directly to PO using a suitable catalyst and a source of oxygen.

Sumitomo has built a 200 000 tonne/year plant in Japan using its cumene to PO technology and has transferred the plant to Nihon Oxirane, its joint venture with Lyondell. Lyondell, which has access to Sumitomo’s process, has also commissioned a pilot plant in Pennsylvania, US, for its new one-step oxidation route.

Other companies are researching a hydrogen peroxide to PO (HPPO) route. Degussa and Uhde have a first licence with Sasol to build a 60 000 tonne/year plant in South Africa, which could start up by late 2006. Dow and BASF have combined research efforts and are evaluating options for a 300 000 tonne/year HPPO plant, which could start up by 2007.

Health and Safety

PO is a clear, 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 respiratory track and ingestion can cause severe burns. It is classed as a probable human carcinogen.

Outlook

Future demand growth is put at about 4-5%/year for Europe, and at 6-8%/year for Asia, with China much higher at 10%/year or more. World overcapacity is estimated at 10-15%, but players say a new worldscale plant is needed about every two years to meet demand growth, particularly in Asia. Shell is building a 250 000 tonne/year unit in Huizhou, China, for 2006 and Bayer has plans for a new plant in Caojing, China, by 2008.

Sources believe new capacity will also be needed in Europe and the US by the end of the decade, but margins need to improve to stimulate further investment.

Global propylene oxide capacity, ’000 tonne/year

Company Location Capacity
Europe
BASF Ludwigshafen, Germany* 125
BP Cologne, Germany 205
Dow Chemical Stade, Germany 550
Ellba Moerdijk, Netherlands 250
Lyondell Fos-sur-Mer, France 220
Maasvlakte, Netherlands** 285
Rotterdam, Netherlands 245
Nizhnekamskneftekhim Nizhnekamsk, Russia 50
Oltchim Rimnicu Vilcea, Romania 17
Polihem Tuzla, Bosnia 22
Repsol YPF Puertollano, Spain 70
Tarragona, Spain 150
Shell Moerdijk, Netherlands 200
ZC Rokita Brezg Dolny, Poland 25
Americas
Dow Chemical Aratu, Brazil 250
Freeport, Texas, US 690
Plaquemine, Louisiana, US 320
Huntsman Port Neches, Texas, US 240
Lyondell Bayport, Texas, US 600
Channelview, Texas, US 550
Asia
Asahi Glass Kashima, Japan 110
Baling Petrochemical Yueyang, China 4
Ellba Eastern Pulau Seraya, Singapore 250
Jin Hua Chemical Huludao, China 120
Jinling Petrochemical Nanjing, China 35
Manali Petrochemical Chennai, India 27
Nihon Oxirane Chiba, Japan 180
Seraya Chemicals Pulau Seraya, Singapore 175
Shandong Befar Group Binzhou, China 65
Shandong Dongda Chemical Zibo, China 40
Shanghai Gaoqiao Pudong, China 80
SKC Chemical Ulsan, South Korea 170
Southeast Electro-Chemical Co Fuzhou, China 50
Sumitomo Chemical Ichihara, Japan 200
Tianjin Dagu Tianjin, China 100
Zhejiang Pacific Ningbo, China 20
* includes butylene oxide ** Bayer takes 50% of output
Source: ECN/CNI






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