27 September 2004 12:26 [Source: ICIS news]
MONTE CARLO Monaco (CNI)--Asia will be short of benzene this year and in 2005 because new derivative capacity would be well in excess of extra benzene production, a Mitsubishi Corp source said here on the sidelines of the European Petrochemical Association (EPCA) conference*.
The source also predicted a major deficit for 2008.
He said that 260 000 tonne/year of new benzene capacity had or would be commissioned this year as against 860 000 tonne/year of additional derivative output.
New benzene capacity in 2004 included 120 000 tonne/year by Aromatics Thailand Co in March and 60 000 tonne/year by China’s Zhongyuang Petrochemical in Q3, he added. Major derivative additions include 200 000 tonne/year of cumene capacity by Taiwan’s Formosa Chemicals and Fibre Corp that was commissioned in June.
Mitsubishi places the 2004 Asian benzene deficit at 600 000 tonne.
The source predicted that the deficit would decline to 305 000 in 2005 tonne due to the commissioning of an extra 1.465m tonne of benzene over 1.77m tonne of derivatives. Major benzene additions include 300 000 tonne/year by Reliance Industries in Q3.
The following year there would be a surplus of 557 000 tonne/year, the source said. In that year he added that 2.82m tonne/year of new benzene capacity would start up over 2.26m tonne/year of derivatives.
The surplus will decline to 23 000 tonne in 2007 as 1.377m tonne/year of benzene comes onstream and over 1.354m tonne/year of derivatives.
The Mitsubishi forecast for 2008 is for a 356 000 tonne shortfall due to the commissioning of 400 000 tonne/year of benzene as against the start-up of 756 000 tonne/year of downstream consumption.
All these predictions are based on confirmed expansions, including the joint-venture cracker projects in China with benzene production from crackers and downstream offtake. Shanghai Secco Petrochemical Co, the joint venture between BP, Sinopec and Shanghai Petrochemical Co, is scheduled to commission its cracker in Q2 next year. It will produce 225 000 tonne/year
of benzene. However, it will require 400 000 tonne/year for a 500 000 tonne/year styrene plant.
Similarly, CNOOC and Shell Chemicals would produce 200 000 tonne/year of benzene from their cracker that is due to start-up in November 2005 with 440 000 tonne/year needed for a 550 000 tonne/year styrene plant, the source added.
There were also several new reformers planned at Chinese and other refineries as Asia attempted to cope with rapidly rising demand, said the source.
He added that feedstock supply could be an issue for some of the benzene additions it lists due to a potential shortfall in heavy naphtha. It also says that certain projects might be jeopardised by a shortage of aromatics vessel space.
The bullish outlook for benzene comes as downstream consumers complain that they cannot pass any further price rises down the chain to their customers.
Taiwan’s China Petrochemical Development Corp, for instance, says the cost of its benzene supply for September was US$1200/tonne CFR (cost and freight) Taiwan over sales of caprolactam at $2050-2100/tonne CFR Taiwan. Its caprolactam pricing has steadily increased from April this year while margins for nylon chip and nylon film producers have been squeezed.
*The 38th annual EPCA conference runs through Tuesday (29th September).
CNI's EPCA newsroom: Suite Naiades C, Grand Hotel; Tel: + 377-9315-1070/71
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