Europe’s naphtha crackers must exploit advantage: bank

08 July 2013 12:30  [Source: ICIS news]

LONDON (ICIS)--European naphtha-based petrochemical producers under pressure from overseas rivals that base production on cheaper ethane feedstock must exploit their exclusive capability to make butadiene (BD), propylene and aromatics, a bank said on Monday.

"It is likely that naphtha cracking will remain a business as this is the only way to produce butadiene, propylene and aromatics," Tamas Pletser, an analyst at Erste Group Bank, said.

"Ethylene derivatives will be loss-makers for the [naphtha] crackers, but on the rest they can make money," he added.

Given the cost advantages now enjoyed by American petrochemical producers that obtain cheap ethane due to the ongoing shale gas revolution in the US, a handful of European counterparts are working on plans to import ethane.

But Erste has cautioned that there are cost obstacles to this strategy, and so it is not a real option for most European petrochemical producers. For instance, ethane is a gas under atmospheric pressure and, the bank says, if liquefied for shipping, the product might become as expensive as more easily available liquefied natural gas.

In a recently issued forecast on expected developments in the petrochemical industry in 2013, naphtha-based Czech petrochemical producer Unipetrol acknowledged the threat posed by the rise of ethane-based production.

"Access to cheap feedstock is shifting production of olefins and their derivatives especially to the Middle East and, thanks to the development of unconventional sources of natural gas, especially gas from shale rocks, also to the US," the company said, adding that naphtha would remain the main feedstock in the European petrochemical industry in the medium term.

However, Unipetrol also took note that the "start-up of new units, and the switch of many existing crackers from naphtha to ethane will lead to lower production of the co-products propylene, butadiene and aromatics".

By: Will Conroy
+44 20 8652 3214

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index