US chemical profile: Propylene oxide

28 March 2011 00:00  [Source: ICB]

USES
Propylene oxide (PO) is used as an intermediate for the production of numerous commercial materials. Its main derivatives include polyether polyols, propylene glycol (PG) and propylene glycol ethers.

SUPPLY/DEMAND
The propylene feedstock for PO has been experiencing recent production issues. US-based Petrologistics' 544,000 tonne/year propylene plant in Houston, Texas, US, went off line during the week ended March 18, following an outage on March 13. The unit went down for equipment repairs, and Petrologistics confirmed that the shutdown was expected to last for one week.

US propylene inventories fell by 2.2% in the second week of March despite increased operating rates at US refineries, according to the Energy Information Administration (EIA). Refinery-sourced propylene stockpiles stood at 2.468m bbl in the week ended March 11, down from 2.524m bbl a week earlier.

US refineries operated at 83.4% of capacity, up from 82.0% in the previous week, according EIA.

PO's consumption is largely tied in with the making of polyether polyols, whose growth in demand is largely dependent on use in polyurethane (PU) foam. PG is the second-largest consumer of PO, particularly monopropylene glycol (MPG).

Global demand for PO had been growing by 4-5%/year, with growth in the US and Europe, estimated at 3-4%/year, but this stopped abruptly when markets collapsed in the second half of 2008.

PRICES

US PO prices rose early in the year from approximately 91.75 cents/lb ($2,023/tonne, €1,416/tonne) to 98 cents/lb. In the week ending March 11, prices fell to 94 cents/lb, as assessed by ICIS.

Meanwhile, upstream feedstock propylene prices in the US rose during the week ended March 18, lifted by firming demand and support from a recent jump in energy prices. Refinery-grade propylene for March traded at 71.50-72.00 cents/lb in the week ending March 18, up from 69.75-70.25 cents/lb a week earlier. Polymer-grade propylene traded at 76 cents/lb early in the week ending March 18, as assesed by ICIS.

TECHNOLOGY
There has been a continuing trend in PO production to develop and commercialize process routes that neither produce sizeable co-products nor use chlorine-based chemistry, according to US consultant Nexant.

PO is traditionally made by chlorohydrin and epoxidation routes, but newer technologies based on hydrogen peroxide or cumene hydroperoxide have been commercialized. A significant amount of PO capacity is still based on the older chlorohydrin process.

The plants using this route are often integrated with chlor-akali plants, which consume a large amount of power in making chlorine and caustic soda. Consequently, extensive effluent treatment is needed to handle the waste stream.

Another process that had once gained in popularity was the PO/styrene monomer (PO/SM) route. The disadvantage here, though, is the potential coproduction of 2.25 tonnes of styrene for every tonne of PO, which can present difficulties in balancing the markets for PO and styrene. This can lead to volatility over time in performing the operations economically. Capital costs can also be relatively high in the PO/SM route. A number of PO/SM plants have been built by companies such as Spain's Repsol, Ellba (Shell/BASF) and Netherlands-based LyondellBasell.

New PO technologies without co-products have now been developed and commercialized, including a cumene hydroperoxidation technology. In addition, a number of companies have developed technologies to make PO from propylene and hydrogen peroxide, a process known as HPPO.

OUTLOOK
Much of PO's future lies in activity in the Asia region. US-based Dow announced in its 2010 fourth-quarter and full-year earnings that it is looking at HPPO production start ups in Thailand this year. Dow developed the HPPO technology with Germany's BASF. The companies expect that ther new HPPO route will provide a more environmentally friendly and cheaper route to PO.

Meanwhile, production issues remain a challenge, with LyondellBassell's PO/SM unit in Channelview, Texas, US having operational issues reported the week ended March 18. According to a filing with the Texas Commission on Environmental Quality, the POSM unit was temporarily taken off line to eliminate flaring after the flow of cooling water to the unit was interrupted.

For the latest market prices and reports on more than 120 commodity chemicals visit ICIS pricing


By: Feliza Mirasol
+1 713 525 2653



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