Chemical profile: cyclohexane

03 August 2009 00:00  [Source: ICB]

USES
Nearly all cyclohexane (CX) is used in the production of nylon intermediates adipic acid (ADA), caprolactam (capro) and hexamethylene diamine to make nylon 6 or 6,6.

Smaller outlets are as a solvent, a reaction diluent and in chemical synthesis.

It is also a starting material to produce cyclohexanol-cyclohexanone - KA Oil.

SUPPLY/DEMAND
Demand in Europe is said to have picked up slightly in the second quarter (Q2), after a very poor Q1 and a dramatic drop in demand in Q4 2008. However, demand remains low and is said to be at about 65-70% of pre-crisis levels. Supply is balanced to long, and plant operating rates remain reduced.

Engineering fibers have been hit harder than textiles because of the automotive slump. But scrappage schemes have bolstered sales and the automotive sector is improving, although the construction sector is still poor.

Overall demand in Europe in 2008 is said to have slumped by up to 30% year on year. The nylon sector remains oversupplied, margins are being heavily squeezed, and more bankruptcies look likely. US producer Invista will close its Wilton, UK, ADA and nylon plants by the end of 2009.

PRICES
The European contract price is mostly settled quarterly at a delta to benzene. CX prices have been pushed up this year by strong and volatile benzene feedstock values.

An initial CX contract settled in late July up by €5/tonne to €120/tonne after lengthy discussions. However, others had not followed at the time of going to press.

Rising raw material costs had quashed buyers' hopes of a rollover. Feedstock benzene contracts jumped by €131/tonne in July due to tight supply and surging spot levels, and a further big increase for August contracts was looking likely last week.

TECHNOLOGY
Most production is based on the catalytic hydrogenation of benzene, either by liquid or vapor-phase methods in the presence of a highly dispersed catalyst or in a catalytic fixed bed.

Processes differ mainly in the means of removing the heat of reaction. Minimum reactor temperatures are preferred for maximum benzene conversion and minimum CX cracking.

Most plants use reformer offgas, which yields benzene and large amounts of hydrogen by-product. Hydrogen and benzene costs are critical for manufacturing economics, with plants often located near large refineries where low-cost feedstocks are available.

OUTLOOK
The European market has been seeing annual growth of 0-2% in recent years. Nylon fiber demand in Western Europe, as well as in the US, has been declining, with most of the growth now in engineering plastics.

Players are hoping that markets will stabilize with flat, rather than negative, growth in 2010-2012. The expectation is that it will take at least five years before returning to pre-crisis demand levels.

Any new investment will be focused in Asia, particularly China, and the Middle East, where demand growth is strongest. Extra CX feedstock will be needed for ChevronPhillips' proposed nylon 6 facility in Saudi Arabia, which is scheduled to come on stream in 2012.

Future investment in Europe is extremely unlikely. Rationalization could be possible following the UK nylon plant's closure.

EUROPEAN CX CAPACITY '000 TONNES/YEAR

Company Location Capacity
Azot Cherkassy Cherkassy, Ukraine 60
BASF Ludwigshafen, Germany 130
BP Refining & Petrochemicals Gelsenkirchen, Germany 140
Cenon Strazske, Slovakia 90
CEPSA Huelva, Spain 180
Erdol-Raffinerie-Emsland Lingen, Germany 260
ExxonMobil Botlek, Netherlands 270
Fina Antwerp Olefins Antwerp, Belgium 110
Grodno Azot Grodno, Belarus 80
Holborn Europa Raffinerie Hamburg, Germany 65
Kemerovo Azot Kemerovo, Russia 155
Kuibyshevazot Togliatti, Russia 120
Lukoil Neftochim Burgas Burgas, Bulgaria 50
PKN Orlen Plock, Poland 120
Rivneazot Rivne, Ukraine 30
SABIC UK Petrochemicals Wilton, UK 330
Schekinoazot Shchekino, Russia 65
SSME Azot Severodonetsk, Ukraine 50
ZA Pulawy Pulawy, Poland 60
ZA Tarnowie-Moscicach Tarnow, Poland 35
 Source: ICIS plants & projects
Profile last published June 12, 2006

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By: Elaine Burridge
+44 20 8652 3214



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