20 January 2010 16:36 [Source: ICIS news]
By Malini Hariharan
It was not too long ago that projections were being made of a benzene surplus in the
The new regulation requires an annual benzene average of 0.62% by volume in a refiner’s system wide gasoline pool. Small refiners have time until 1 January 2015 to meet this requirement.
The size of the
But Dewitt & Co in a recently concluded study questions whether the effect would be as great as that foreseen by the EPA and other analysts.
“The experience in
“A refiner can precut naphtha to eliminate the precursors of benzene. There are also other things; hydrogen is cheap in the US because of low gas prices. So refiners can saturate it to make cyclohexane which is a good gasoline component. Or they can optimise to other products,” Nicholson says.
The US is estimated to have imported around 1m tonnes of benzene last year as production fell sharply due to cuts in refinery operating rates on weak gasoline demand and poor economics.
Poor gasoline demand resulted in decreased demand for octane and therefore for reformate, which is the leading source of benzene in
“We estimate that
A previous study done by the consultancy in 2007 had predicted that the impact of the MSAT II regulations would be much less than estimates by most commentators. And the main message from the new study is that the US will continue to be a significant importer of benzene.
But import volumes will depend on operating rates at US styrene plants and demand from
DeWitt estimates that the
“This was because domestic demand declined and also because of competitive ethylene,” points out Nicholson. Natural gas-based ethylene economics in the US improved significantly last year following a softening in the prices of ethane.
“So even if benzene prices are higher, the ethylene advantage will allow the
US styrene producers have struggled in the last few years with poor profitability and weak demand growth for key derivatives. The industry has seen considerable rationalisation of capacity, but more plant closures and alliances are possible as producers fear thin margins and sluggish demand recovery in 2010.
“Further rationalisation of styrene capacity in the
While Dewitt’s study makes an assessment of US benzene balances in the coming years, Nicholson stresses that the analysis is not straightforward.
He also points out that the 2007 Dewitt study had forecast that the
“That view has changed; there will be continuous imports from outside the region. Asia will export to the US and volumes will depend on price and end-use markets,” says Nicholson.
And within Asia,
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