29 November 2013 17:21 [Source: ICB]
Demand growth will outpace any new capacity expansion, which will help improve the global supply/demand balance
Global growth rates for styrene monomer (SM) will be conservative relative to GDP in the coming years, a major styrene player said on 21 November, while supply will face constraints from growing derivative demand.
With a global growth rate between now and 2020 projected at under 3%, Torrez felt that the industry was still reeling from the wider economic downturn of 2008.
This global growth will be driven by northeast (NE) Asia, with both the US and Europe likely to remain flat in the coming years. Over 50% of SM growth in 2012 came from NE Asia, Torrez added.
Finding the balance
Capacity expansion will be limited in the near-term, with no active build period on the horizon, and primarily focused in NE Asia. However, demand growth will outpace any new capacity expansion, which will help improve the global supply/demand balance.
Torrez pointed out that operating rates for SM will have to reach 90% and over to maintain pace with demand growth, and that smaller, fragmented plants are at risk of under-running.
He noted several key drivers of capacity under-utilisation - limited feedstock access and non-integrated units, as well as geopolitical constraints. It is these very challenges that mean NE Asia is likely to remain a net importing region of SM.
In the case of Europe, Torrez highlighted the importance of PO (propylene oxide)/SM production, to which the European market is highly leveraged, with around 40% of regional styrene capacity as opposed to 21% in North America and 15% in NE Asia.
“This could make things interesting in Europe for styrene, given developments in PO and its derivatives,” Torrez said, noting that there are multiple routes to PO outside of PO/SM which are often favoured by the PO market.
The US market will expand as an export hub for styrene, with the ethylene advantage remaining the key driver. Torrez predicted that up to 30% of production output will be exported from the region to Asia, South America and Europe.
In terms of future challenges to styrene, Torrez identified the polystyrene (PS) and polypropylene (PP) differential and possible product substitution, as well as increased regulatory pressure on the market.
With regards to the latter point, he said: “We as an industry need to be more cognisant of this, and promote the safety and benefits to long term societal goals.”
The 12th ICIS World Aromatics and Derivatives conference ran from 20-21 November, 2013.
Sample issue >>
My Account/Renew >>
Register for online access >>
|ICIS Top 100 Chemical Companies|
|Download the listing here >>|
Asian Chemical Connections