28 June 2010 00:00 [Source: ICB]
Orthoxylene (OX) is the second-largest of the three commercial isomers of xylene. Almost all OX output is used to make phthalic anhydride (PA), which is used in phthalate plasticizers, primarily dioctyl phthalate (DOP) for polyvinyl chloride (PVC), as well as unsaturated polyesters and alkyd resins.
Small quantities are used in solvent applications and to make bactericides, soya bean herbicides and lube oil additives.
Demand for OX in the EU 27 was 520,000 tonnes in 2009, showing a significant drop on 2008's level of around 580,000 tonnes, according to UK consultancy Tecnon OrbiChem.
Producers and buyers in Europe say overall demand has improved this year, although it is not back to pre-crisis levels. PA producers report strong exports to Turkey, and North Africa, particularly stimulated by a strong US dollar against the euro. Demand in Europe for PA is said to be acceptable, albeit not very strong.
Plant operating rates for OX are also better, although extraction rates at refineries are still reduced significantly. Supply is balanced to tight with very little spot or imported material available. Buyers' requirements are generally being covered by contracted volumes, with no need for extra spot purchases.
Prices are influenced to a large degree by those for gasoline. European contracts settled at €820/tonne in June, down by €25/tonne from May, because of falling crude oil and OX values in the US and Asia.
Spot numbers are notionally at $1,100-1,170/tonne, but business is virtually non-existent as buyers' interest remains minimal. Margins have improved since the depth of the crisis in 2009, but are still low and below acceptable levels.
Producers say it is difficult to pass increases downstream as the derivative PA sector is still struggling as a result of depressed demand and excess capacity.
Mixed xylenes (MX) are produced by high-severity catalytic reforming of naphtha from which the C8 stream contains ortho-, meta-, and paraxylenes (PX), as well as ethylbenzene (EB).
Xylenes are also obtained from the pyrolysis gas (pygas) stream in a naphtha steam cracker and by toluene disproportionation (TDP). The xylenes are passed through a splitter where the bottom stream, with a targeted amount of OX, is sent to a distillation column to produce high-purity product.
The outlook in the short term is dominated by the eventual recovery of the downstream PA market, which is heavily dependent on the construction industry. The PA sector is oversupplied and in need of further rationalization: the question is, when this will happen.
No future investment in OX is likely in Europe: rationalization in line with predicted closures of PA capacity is forecast, rather than expansion.
However, a small increase from 10,000 tonnes/year to 40,000 tonnes/year will be completed for Polish producer PKN Orlen in Plock during the fourth quarter of this year. The project is the result of an expansion of PX capacity at the site to feed new downstream purified terepthalate acid (PTA) production.
After a slump in 2009, sources expect a return to growth in 2010. However, the market is mature, so long-term growth is still rated at around 1%/year in Western Europe.
EUROPEAN ORTHOXYLENE CAPACITY, '000 TONNES/YEAR
Capacity BP Refining & Petrochemicals
Botlek, the Netherlands
130 Galp Chemical
50 Hungarian Oil and Gas
65 Lukoil Neftochim Burgas
25 Omsk Refinery
165 PCK Raffinerie
65 Polimeri Europa
70 Sarroch, Italy
90 PKN Orlen
15 Shell & DEA Oil
15 Wesseling, Germany
15 Total Petrochemicals
165 Source: ICIS plants and projects
Profile last published April 28, 2008
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