16 May 2012 07:17 [Source: ICIS news]
By John Richardson
KUALA LUMPUR (ICIS)--Around 40m tonnes/year of new ethylene (C2) capacity will be needed to meet global demand growth in 2012-2020, a chemicals industry consultant said on Wednesday.
“The global economy is expected to recover from the current recession due to the continuing growth seen in emerging markets, hence the need for this new capacity,” Nexant Chemsystems consultant Lee Fagg told ICIS.
Along with the recovery in growth, he said that another important development was the big shift in the type of feedstock slate used for olefins production.
“Over the past decade, we’ve seen a significant shift towards lighter feedstocks, primarily ethane and other NGLs (natural gas liquids), because of the spate of new investments in the ?xml:namespace>
“The trend towards lighter feedstocks is forecast to continue for now because of the impact of shale gas on chemical production in North America and further lighter feed projects in the
Projects based on naphtha are now less attractive because they require higher capital expenditure, he said.
“Also, over the next 10 years, there will be more limited availability of merchant naphtha because many of the big, state-owned refiners in Asia and the Middle East are integrating downstream into petrochemicals,” the Nexant consultant said.
Petrochemicals producers who are not integrated with refining are therefore searching for other conventional and non-conventional feedstock options for future ethylene investments.
One of the most attractive alternatives is shale-gas derived ethane in the
Furthermore, investments in methanol to olefins, via natural gas, will also play a role in the changing ethylene feedstock story. Companies will seek to montetise low-cost natural gas reserves without flooding the methanol and ammonia markets.
Fagg said that a consequent tightening of supply of butadiene (BD) and propylene from the change of feedstock slate is another big petrochemical story.
Ethane cracking yields very low percentages of mixed C4s - from which butadiene is extracted - and propylene and MTO projects produce no C4s.
The structural shift away from naphtha cracking has contributed directly to the spikes in butadiene pricing seen over the last two years.
Currently, 64% of
“The total ethane market share of
Increases in propylene spreads over ethylene would, however, be limited as its main derivative, polypropylene (PP), can be replaced by polyethylene (PE) and other polymers in many applications, he added.
“When PP becomes too expensive, big retailers such as Wal-Mart are able to switch to plastic converters who make packaging etc from PE, and also polystyrene (PS), in many applications. This acts as an automatic cap on the propylene/ethylene price delta,” said Fagg.
“There are no such constraints on the price of butadiene, as it cannot be replaced in its end-use applications by other polymers.”
Tyres for the automotive industry are the main end-use application for BD.
Rising auto sales in countries such as
Even when demand growth rates slow down, as has been the case in
BD prices had increased to the point where on-purpose production, via de-hydrogenation, had become viable, said Fagg.
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