Global butadiene market could be 1.7bn lb/yr short by 2016 – TPC CEO

09 March 2012 17:28  [Source: ICIS news]

HOUSTON (ICIS)--The global butadiene market is likely to become critically short, with a forecast supply/demand gap of 1.7bn lb/year (771,000 tonnes/year) by 2016, the chief executive of US-based petrochemicals producer TPC Group said on Friday.

The market is going to be critically short, the best outcome for the industry is that butadiene in the future is balanced tight, which will require a lot of on-purpose butadiene production capacity in the future,” CEO Mike McDonnell said, citing a study TPC commissioned.

TPC is moving forward with a preliminary engineering study of a low-cost butadiene project to take advantage of the expected shortfall, McDonnell said.

The company’s project would produce about 600m lb/year of butadiene on purpose from cost-advantaged natural gas liquids (NGL) in the US, McDonnell said.

The project, which would run on TPC’s OXO-D process technology, involves the restart of an idled dehydrogenation unit.

TPC has begun detailed discussions with customers on long-term off-take agreements for the project, McDonnell said. The outcome of those talks will determine the actual economics and final capacity of the project, he added.

Apart from its own project, TPC has heard of only three other small on-purpose butadiene projects, all in China, which could start up by around 2013/2014, McDonnell said.

However, the supplies from those Chinese projects were “a drop in a bucket of water, relative to the demand over the next few years,” he added.

On Thursday, TPC reported an $18.4m (€13.8m) net loss for the 2011 fourth-quarter because of a temporary decline in butadiene contract prices. However, between December and March, prices have risen 49%, the company said.

Additional reporting by Bobbie Clark

($1 = €0.75)

By: Stefan Baumgarten
+1 713 525 2653

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