Aromatics '05: Benzene to become core petchem product

15 November 2005 13:47  [Source: ICIS news]

COLOGNE, Germany (ICIS news)--The global benzene industry is facing significant changes as the chemical moves from being a by-product to a core petrochemical product, a senior Shell official said on Tuesday.

"Benzene has moved from being a refinery by-product to a core petrochemical product and could become cyclical as it moves into the mainstream," Sven Royall, Shell Chemicals vice president for strategy, acquisitions and divestments said at the Fourth Aromatics and Derivatives conference

He warned that demand for aromatics was outpacing supply because new cracker capacity in the Middle East was based on ethane which produces minimal amounts of pygas, a key benzene feedstock.

Although aromatics production in the region was being expanded significantly, most of the benzene output was for new styrene capacity with very little available for export. Royall said new capacity would be built in Asia but this will fall short of demand.

"Additional on-purpose benzene supply is needed in the future to keep up with forecast growth of 4% a year but any investment poses a key challenge," he said. To face these challenges and stay competitive, Royall said new and existing capacity will need to have access to low cost feedstocks, economies of scale, site integration, technology and links to customers.

Existing refineries could make a substantial amount of incremental benzene but many firms would be reluctant to invest in a product that is non-core and where output had been cut, he saud.

Royall also warned that high oil prices could undermine benzene’s value as high prices would mean that benzene-based polymers were expensive relative to others and product substitution could dampen demand.

By: Elaine Burridge
+44 20 8652 3214

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