25 June 2012 00:00 [Source: ICB]
Styrene monomer, of which ethylene and benzene are key raw materials, is used in the manu-facture of a broad range of derivatives. Demand for styrene, estimated at just over 27m tonnes in 2011, is largely generated by polystyrene (PS) and expandable polystyrene (EPS), accounting for nearly 60% of its use, followed by acrylonitrile butadiene styrene (ABS), styrene butadiene rubber (SBR) and other minor derivatives such as styrene butadiene latex (SB).
PS is a mature product exposed to price-sensitive uses such as cutlery
All styrene derivatives, except PS, exhibited good growth, contributing to the recovery of the styrene industry after 2008.
PS is a mature product and is exposed to highly price-sensitive industries as it is widely used in the commodity packaging sector, for example for disposable cutlery and vending cups, as well as the electronics and electrical sectors. PS is expected to develop at 1.4%/year from 2010 to 2018.
In contrast EPS, which is mainly used for building insulation as well as packaging, will outperform all styrene derivatives with growth of 4.2%/year from 2010 to 2018.
Middle East consumption of styrene accounts for only 4% of the global market; however, global styrene capacity development is concentrated in the Middle East, along with Asia-Pacific, in particular China. The Middle East is expected to outperform global styrene growth, developing at nearly 11%/year from 2010 to 2018, albeit from a small base.
Styrene consumption is benefiting from two main drivers: diversification and local employment policy, which is encouraging producers to develop more derivative capacity including styrene. Strong economic growth in countries such as Turkey, which lack upstream integration, will see development in demand for styrene derivatives.
Around 50% of styrene consumed in the Middle East is for PS production, with 15% used in the production of EPS. Turkey, reliant on imports of PS, is the largest PS consumer, accounting for nearly 50% of regional consumption, followed by Iran and Saudi Arabia.
Styrene production has grown rapidly in the Middle East in recent years, with three new plants starting up between 2008 and 2010, and other projects in the pipeline from 2015. In 2008, Jubail Chevron Phillips brought onstream a 775,000 tonne/year plant in Al Jubail, Saudi Arabia; Pars Petrochemical's 600,000 tonne/year styrene plant came onstream in January 2010 in Bandar Assaluyeh, Iran; and The Kuwait Styrene Company commercialized a plant for 450,000 tonnes/year in 2009.
SADAF is also present in Saudi Arabia with a combined 1.05m tonnes/year of styrene from two plants, and Persian Gulf Petrochemical and Tabriz Petrochemical are located in Iran.
There are three PS producers in the Middle East: Petrokemya operates two plants at Al Jubail, Saudi Arabia; Baser Petrokimya one in Adana, Turkey; and Tabriz Petrochemical one in Iran. A joint venture project, which will add 200,000 tonnes/year of PS capacity, has reportedly been delayed from Q4 2011 to Q2 2012, and is now in the commissioning phase. The plant is part of the National Chevron Phillips joint venture between Chevron Phillips Chemical and Saudi Arabia's Petrochem.
Supply of EPS in the Middle East is relatively small, from Tabriz Petrochemical, Petrokemya and Eastchem, the most recent EPS start up in 2007 in Izmir, Turkey. Pars Petrochemical has plans for a new EPS plant in Bandar Assaluyeh, Iran, but the timing of any such development remains unclear.
Development of the styrene and derivatives industry is not only influenced by consumer markets, but by challenges occurring in the supply of raw materials: ethylene and benzene. Styrene accounts for around half of total global benzene demand, while in the Middle East, styrene dominates benzene consumption at just over 80%.
Globally, styrene derivatives became uncompetitive in some applications due to high benzene prices, which resulted in some switching to alternative polymers. This was in part due to the major expansion of gas-based steam crackers in the Middle East as little pygas was available for benzene production. However, the substitution pressure has since eased following oversupply in the benzene market due to major capacity additions coupled with tightness in propylene supply.
FOCUS STILL ON PE, MEG
From 2007 to 2011, capacity for ethylene and its derivatives doubled in the Middle East, as several, mainly mixed-feed steam crackers were built. The derivative slate remains heavily focused on linear low-density/high-density polyethylene (LLDPE/HDPE) and monoethylene glycol, although initiatives to diversify exports have started to yield a more complex consumption profile for ethylene in the region. Styrene accounts for just 5% of ethylene use in the Middle East.
The Middle East and China will continue to drive styrene capacity development as producers can benefit from benzene and ethylene availability and proximity to market. Trade flows are therefore expected to increase as a result of export-orientated capacity developments in the Middle East.
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