05 April 2013 09:37 [Source: ICB]
Mike McDonnell, CEO of the US producer, sees better conditions in the second half of the year as economies ramp up
Global butadiene (BD) demand is set to improve in the second half of the year after several more months of softness, the chief executive of US-based BD producer TPC Group said.
"Things are a bit soft now and we see that continuing for the next three to four months.
"But we see a better second half with an improving economy in the US, as well as in Asia," said TPC Group CEO Mike McDonnell on the sidelines of the International Petrochemical Conference (IPC) sponsored by the American Fuel and Petrochemical Manufacturers (AFPM).
McDonnell: positive outlook
"Asia is slow, Europe has really slowed down and the US is relatively soft but improving," he said. "We would like to see more demand, but on the other hand, this is preventing episodes we had in the past with the price of BD spiking."
Crude C4 supply in the US is relatively stable and will grow modestly, he added.
"All the US cracker expansions and new crackers will increase supply modestly," said McDonnell. "Overall supply [of C4] is stable but not growing a lot in the US. The US is net short of BD and relies on imports."
TPC uses crude C4 streams from crackers and refineries to produce BD.
All the cracker expansions and new builds in the US are based on ethane feedstock because of the cost advantage stemming from abundant shale gas. While this produces low-cost ethylene, the process yields much smaller amounts of C4 as a by-product versus naphtha cracking.
ON-PURPOSE BD FILLS GAP
The production of on-purpose butadiene (BD) using natural gas liquids (NGL) can help fill the supply gap and will go a long way in reducing price volatility in the US market, said the CEO.
"We believe that we can have a favourable impact on the market in terms of reducing volatility," McDonnell said. TPC is in the second phase of its engineering study to build a 600m lb/year (270,000 tonne/year) on purpose BD plant using its proprietary technology at a site in Texas. Start-up is scheduled for late 2016.
"We will use NGL [natural gas liquids] feedstock and in particular we think butane will be a very attractive feedstock for us," said McDonnell.
"We believe we will build the world's lowest cost on-purpose BD plant because of the abundant NGL in the US, and our technological advantage.
"If you're not the low-cost producer for on-purpose BD, when the market cycles down, you're the first to shut down."
While on-purpose BD is not likely to lead to US self sufficiency in the key building block for synthetic rubber, it will reduce import requirements, McDonnell said.
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