Benzene

12 March 2007 00:00  [Source: ICB]

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Uses

Benzene is mainly used to make styrene, phenol, cyclohexane, aniline, maleic anhydride, alkylbenzenes and chlorobenzenes. It is an intermediate in the production of anthraquinone, hydroquinone, benzene hexachloride, benzene sulphonic acid, and other products used in drugs, dyes, insecticides and plastics.

Supply/demand

Global markets were tight in 2006 as supply trailed rising demand. In Europe, derivative demand was strong, and several unplanned shutdowns reduced benzene availability. World supply should improve in 2007 with new capacity due in Spain, Taiwan and Iran. CEPSA started up a 230,000 tonne/year unit in Huelva, Spain, last December, and Repsol YPF's 180,000 tonne/year plant in Tarragona, Spain, is set to start up this quarter.

Industry restructuring has included SABIC's purchase of Huntsman's UK assets, and the acquisition by INEOS of Innovene's (formerly BP) olefins, polyolefins and aromatics businesses.

Pricing

European prices performed strongly last year and producers' margins improved significantly. The delta over naphtha stayed very high, particularly in the second half when spot levels soared over $1,000/year and naphtha stayed low. European monthly contracts settled at €786/tonne for March, up by €64/tonne on February. Spot business was trading in early March at $1,030-1,040/tonne CIF NWE following firmer crude and higher US and Asian values.

Technology

In Europe, the main source is from pyrolysis gasoline (pygas) co-produced in the steam cracking of naphtha, gasoil or condensates to make olefins. Another source is the selective disproportionation of toluene where benzene is co-produced in the manufacture of a paraxylene-rich xylenes stream. A third process is the hydrodealkylation of toluene, but this is a high-cost route, and benzene prices need to be high enough to stimulate production.

Benzene is also co-produced in BP/UOP's Cyclar process, which converts butanes and propanes into aromatics. To date, only one plant in Saudi Arabia has been built.

Health and safety

Benzene is a clear, highly flammable liquid. Vapours can be absorbed through the lungs or skin, and it is a suspected carcinogen.

Outlook

The majority of investment is in Asia and the Middle East. Additions in Iran, Saudi Arabia, Oman and Kuwait between 2007 and 2010 will total more than 1.5m tonnes/year, says Nexant ChemSystems. A further 1.26m tonnes/year are expected in Saudi Arabia, Iran and Qatar from 2011. But continued investment in derivatives, mainly styrene, will reduce the region's net exports from 2008.

Asian supply remains below demand, which will grow by 3-5%/year until 2010. Several plants are planned over the next few years, notably in China, to feed rising styrene and phenol production. But with excess capacity forecast, Asia will become a significant exporter and global price setter.

Western Europe and North America will remain net importers. CEPSA will expand output again in Huelva, Spain, by 130,000 tonnes/year by 2010. PKN plans 80,000 tonnes/year in Plock, Poland, for 2009.

West European benzene capacity, '000 tonnes/year

Company	Location	Capacity
AP Feyzin	Feyzin, France	110
Arsol Aromatics	Gelsenkirchen, Germany	250
BASF	Antwerp, Belgium	250
	Mannheim, Germany	320
Borealis	Porvoo, Finland	150
BP	Geel, Belgium	60
BPRP	Gelsenkirchen, Germany	410
CEPSA	Algeciras, Spain	245
	Huelva, Spain	400
ConocoPhillips	Immingham, UK	200
Dow Chemical	Bohlen, Germany	320
	Terneuzen, Netherlands	915
Erdol-Raffinerie-Emsland	Lingen, Germany	75
ExxonMobil	Botlek, Netherlands	650
FinaAntwerp Olefins	Antwerp, Belgium	170
Galp Chemical	Oporto, Portugal	80
Gexaro*	Lavera, France	240
Holborn Europa Raffinerie	Hamburg, Germany	65
Ineos Olefins	Grangemouth, UK	295
	Cologne, Germany	370
OMV	Burghausen, Germany	160
PCK	Schwedt, Germany	70
Polimeri Europa	Porto Marghera, Italy	110
	Priolo, Italy	440
	Sarroch, Italy	50
Repsol YPF	Puertollano, Spain	125
Sabic Europe	Geleen, Netherlands	350
Sabic UKPetrochemicals	Wilton, UK	510
Shell	Godorf, Germany	510
	Moerdijk, Netherlands	550
	Stanlow, UK	240
Shell & DEA Oil	Heide, Germany	120
	Wesseling, Germany	160
Syndial P. Europa	Porto Torres, Italy	220
Total Petrochemicals	Antwerp, Belgium	250
	Carling, France	325
	Gonfreville, France	360
VFT Belgium	Zelzate, Belgium	90
Source: ICIS* Total/INEOS

Profile last published 23 August 2004

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