Chemical Profile Orthoxylene

02 August 2004 00:01  [Source: ICB Americas]

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ORTHOXYLENE

August 2, 2004
US PRODUCER

CAPACITY*

ExxonMobil, Baytown, Tex.

280

ExxonMobil, Chalmette, La.

155

Flint Hills Resources, Corpus Christi, Tex.

270

Lyondell-Citgo Refining, Houston

270

Total

975


*Millions of pounds of orthoxylene (OX) per year. Typically recovered via two-stage distillation, OX is first distilled from other C8 aromatics. The overhead fraction consists of meta-xylene and paraxylene and ethylbenzene. The bottoms, a mixture of OX and C9 and higher aromatics, are redistilled to recover OX and C9 and higher aromatics. The latter are used as solvents or as blending components for gasoline. The purity of the OX produced is 98 to 99 percent. All producers have captive supplies of mixed xylenes. Large quantities of unisolated OX in mixed xylene streams are used in gasoline or isomerized to paraxylene. ExxonMobil is the only US producer to use OX captively for phthalic anhydride production. Flint Hills Resources LP is the refining and chemicals subsidiary of Koch Industries Inc., formed in January 2002, with Koch's reorganization. In March 2001, Chevron Phillips shut down its aromatics plant in Guayama, Puerto Rico, due to high naphtha costs and weak pricing for major aromatics. Concurrently, the company's 150 million pound OX unit also went down. The plant is still off line and may remain down permanently. Profile last published 6/11/01; this revision 8/2/04.

DEMAND

2002: 1,075 million pounds; 2003: 1,110 million pounds; 2007: 1,200 million pounds, projected. Demand equals production plus imports (2002: 668 million pounds; 2003: 767 million pounds) less exports (2002: 219 million pounds; 2003: 368 million pounds).

GROWTH

Historical (1998-2003): 1.8 percent per year; Future: 2 percent per year through 2007.

PRICE

Historical (1998-2003): High, 27c. per pound, contract, bulk, f.o.b.; low, 12c., same basis. Current: 31.5c., same basis. Current spot price, 31.8c.

USES

Phthalic anhydride, 89 percent; miscellaneous, including solvent applications, bactericides, soybean herbicides and lube oil additives, 11 percent. OX’s major market, phthalic anhydride, has three principal uses: phthalate plasticizers used in compounding polyvinyl chloride (PVC) resins, unsaturated polyesters used in glass-reinforced, thermoset engineering applications and alkyd resins used chiefly for surface coatings.

STRENGTH

Phthalic anhydride plasticizers are used to modify compounded polymers, primarily PVC resins. Thus, consumption of plasticizers is largely dependent on the growth of flexible PVC, which is sensitive to general economic conditions; construction and automobiles being the principal drivers. In 2000 and 2001, PVC production dropped significantly, before recovering in 2002 to a level comparable to that reached in 1999. Demand for OX mirrored this decline and recovery. As the economy continues to expand, demand for XO to produce phthalic anhydride will also grow, as more than 50 percent of phthalic anhydride is consumed in plasticizers.

WEAKNESS

About 23 percent of phthalic anhydride, derived from OX, is used in preparing unsaturated polyester resins (UPR), which are thermosetting and usually blended with glass fibers to produce fiberglass-reinforced plastics. The principal markets (construction, marine and transportation) are closely linked with the general economy, but UPR growth is tempered by the major application areas having become saturated. Phthalic anhydride-derived alkyd resins, about 15 percent of OX demand, are principally used in surface coatings for architectural, machinery, furniture and fixture applications. Demand for phthalic anhydride-based alkyds has been negatively influenced by Clean Air Act regulations limiting the level of volatile organic compounds in surface coatings. Solvent use of OX is likewise declining.

OUTLOOK

Phthalic anhydride producers have plenty of excess capacity, so this will not be a constraint on OX in the coming years. And phthalic anhydride demand is closely associated with construction and transportation, both sectors which are sensitive to the state of the economy. As such, phthalic anhydride and consequently XO should do well in the near term with the current robust economy. OX is also a precursor for polyethylene-2,6-naphthalate (PEN), which is a high performance polyester that is being used to produce film and rigid packaging where performance needs are more rigorous than polyethylene terephthalate products. PEN is an emerging, potentially significant market and could dramatically increase the demand for OX in coming years. OX is projected to grow at 2 percent per year, through 2007.


By: Mark Kirschner
+1 713 525 2653



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