Chemical Profile - POLYBUTENES

12 April 2004 00:01  [Source: ICB Americas]

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POLYBUTENES

April 12, 2004

US PRODUCER	CAPACITY*
BP, Whiting, Ind.	260
Infineum USA, Baytown, Tex.	195
Infineum USA, Linden, N.J.	110
Lubrizol, Deer Park, Tex.	200
Total	765

*Millions of pounds per year of polybutenes ranging in molecular weight from about 300 to 3,000. Operating capacities are approximate, depending on the purity of isobutylene feed streams and the product mix. Two companies also produce highly reactive polyisobutylene (HR-PIB). Chevron Oronite Company at Belle Chasse, La., has 130 million pounds of capacity, and Texas Petrochemical Company has 65 million pounds of capacity in Houston, Tex. Both of these HR-PIB units came on line in 2000. In 2001, BP consolidated its North American polybutene production at its Whiting, Ind., refinery, ceasing polybutene production at its Texas City, Tex., refinery. About 255 million pounds of annual capacity were eliminated by the move. Infineum USA LP is a joint venture formed for lubricant oil additives by Exxon Chemical Company, Shell Petroleum Company Ltd. and Shell Chemical Company in 1999. The production facilities in Baytown, Tex., and Linden, N.J., were previously part of the Exxon operations. InfineumÕs production is captive. Profile last published 11/15/99; this revision 4/12/04.

DEMAND

2002: 725 million pounds; 2003: 740 million pounds; 2007: 755 million pounds, projected. Demand equals production plus imports (2002: 24 million pounds; 2003: 52 million pounds) less exports (2002: 46 million pounds; 2003: 47 million pounds).

PRICE

Historical (1998-2003): High, 43¢ per pound, 950-1,300 mol. wt., tanks, f.o.b.; low, 38.5¢, same basis. Current: 47.5¢, same basis.

GROWTH

Historical (1998-2003): 0.5 percent per year; Future: 0.5 percent per year through 2007.

USES

Fuel and lube oil additives (production of corrosion inhibitors and dispersants), 60 percent; adhesives and sealants, 25 percent; miscellaneous, including lubricant viscosity control, leather impregnation, resin plasticizers and dielectric fluids for electrical applications, 15 percent.

STRENGTH

Polybutene consumption is most influenced by the market for lube oil additives, which is, in turn, a function of lubricant sales. Lubricant sales in the US are growing at 1 to 2 percent per year. Polyisobutene succinimides dominates the dispersant market in lubricants with an 80 percent share. An additional 15 percent share is held by polyisobutene succinates. These market shares have not changed significantly in the last few years.  Higher molecular-weight polybutenes are used as modifiers in various adhesives, especially hot-melt and pressure-sensitive products. These applications have modest growth prospects.

WEAKNESS

Polybutene consumption in lube oil additives is also a function of additive levels. Dispersant levels have dropped 10 to 15 percent after 1996 following the adoption of new quality specifications. Highly reactive polyisobutylene competes with conventional polybutenes in the fuel additives market, growing at 1 to 2 percent per year, while conventional polybutenes are flat to declining. Manufacture of HR-PIB uses high-purity isobutylene as its feedstock. HR-PIB commands a 25 to 30 percent premium over conventional polybutenes, but its superior performance in most applications can compensate for the price differential.

OUTLOOK

Rationalization of capacity by BP in 2001 tightened the polybutene supply side, causing an attendant drop in exports and an increase in imports the following year. In 2003, imports grew again while exports remained relatively flat. The market appears to be in balance and should remain so as demand growth is comparatively soft, projected at 0.5 percent for the forecasted period. Two price increases of 4.5¢ each in 2003 allowed producers to recover margins eroded by hydrocarbon costs that had been increasing dramatically since 2001. With the strong economy, produces may look for another price increase in 2004.

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