Aromatics '05: High gasoline prices weigh on aromatics

15 November 2005 12:10  [Source: ICIS news]

Gasoline prices rise furtherCOLOGNE, Germany (ICIS news)--High gasoline prices will continue weigh on petrochemicals as aromatics prices appear have hit a ceiling while feedstock costs maintain their recent uptrend, a senior industry official said on Tuesday.

David Hughes, aromatics commercial manager at Huntsman Petrochemicals UK, said the impact would be threefold: Aromatics derivatives would find it difficult to pass on rising prices, high energy costs could hit consumer spending and would also hit aromatics margins.

Hughes said at the Fourth European Aromatics and Derivatives Conference that the volatility of gasoline and benzene prices in 2001-2005 were well outside the band of fluctuation in the previous 10 years and had not been predicted.

He said this was now a significant problem because aromatics prices seemed to have found a ceiling above which prices will not rise despite feedstock costs now trading at least double long term historical averages.

As crude oil prices fluctutate second-by-second, with downstream products priced on a longer term basis, aromatics were expected to be the “shock absorber” in the middle.

Hughes also said there were concerns over where future benzene supplies were likely to come from. The pygas route would produce little extra benzene because new cracker capacity coming onstream was mostly Middle Eastern ethane-based plants yielding no benzene. The reformate route was also unlikely to produce additional volumes, he said.

The least negative outlook was for purpose-built production, via toluene disproportionation (TDP) or hydrodealkylation (HDA). But TDP investment would be driven by polyester investments and not by benzene while HDA was extremely expensive due to costly hydrogen, Hughes said. 

One positive prospect was that since aromatics would increasingly need on-purpose investment, margins would have to justify this, he said.


By: Barbara Ortner
+44 20 8652 3214



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