Styrene

02 July 2001 00:00 [Source: ICB]

Long-term growth is good but prices and demand have fallen sharply this year due to the economic slowdown. Output has been cut to match weak demand for polystyrene

Uses

Styrene's main consumer is polystyrene, which accounts for about two thirds of demand. It is also used to make styrene-butadiene rubber (SBR), acrylonitrile-butadiene-styrene (ABS) and styrene-acrylonitrile (SAN) resins. End uses include packaging, construction, automotive and household goods.

Supply/demand

Styrene markets have been under severe pressure this year from the general economic slowdown, high feedstock costs and weak polystyrene markets. European styrene producers have reduced output to match lower demand for polystyrene, which has seen sliding prices and production cutbacks in quarter two. CMAI expects demand to show a 3% fall this year against 2000, where demand was up 4.1% over 1999. Operating rates in 2000 were 93% of installed capacity and will be about 88% in first half 2001, CMAI noted. The outlook for quarter three, a traditionally slow period, is bleak but players are hoping to see an upturn in quarter four. Kaucuk's expansion to 170 000 tonne/year is due by end 2001.

Pricing

European prices have been in freefall since February. The second quarter contract price dropped by E75/tonne to E700-725/tonne for barge/truck deliveries, following a E115/ tonne fall in quarter one, and contracts are set to fall again in quarter three. Spot numbers have dived from January's high of $675/tonne to about $470/tonne fob in mid-June. CMAI said cash margins for a typical producer with conventional technology fell from E100/tonne in March to E40/ tonne in April. US prices slid to 23/23.5 cent/lb in late May. Asian levels have also plummeted, with intertrade deals in mid-June at $440-450/tonne fob Korea.

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Technology

Ethylbenzene-based (EB) technology is the dominant route. EB is made by the catalytic alkylation of benzene with ethylene, in either vapour or liquid phases, using either aluminium chloride or, more recently, zeolite catalysts. The EB is then dehydrogenated to styrene in the presence of steam over iron-chromium oxides or zinc oxide catalysts using multiple bed adiabatic (the preferred choice) or tubular isothermal reactors. The coproduction of styrene with propylene oxide (PO) is gaining popularity and is used now by Lyondell, Shell, Repsol and Ellba. In this process, EB is oxidised to its hydroperoxide and then reacted with propylene to produce PO and methyl phenyl carbinol. The latter product is then dehydrated to styrene. Butadiene-based processes have been developed to make EB (DSM/Stamicarbon) and styrene (Dow) but are not believed to have been commercialised.

Health and safety

Styrene is a colourless, oily liquid with an aromatic odour and is miscible with most organic solvents. It is highly flammable and forms explosive mixtures in air. Its vapour is slightly toxic and can irritate the eyes, nose and throat and exposure can also affect the central nervous and respiratory systems. The International Agency for Research on Cancer has classified styrene as possibly carcinogenic to humans.

Outlook

Despite current weak conditions, overall market fundamentals are positive. Global growth is forecast at about 5%/year in a 21m tonne market, with European growth rates at 2-3%/year. Poor investment returns have held back several projects and no new capacity additions are expected until second half 2002 when Ellba Eastern's 550 000 tonne/year plant in Singapore is due. CMAI says global operating rates will increase to about 97% in 2002 to meet continued demand growth.

However, beyond 2003 a new wave of capacity is due onstream, which will exceed consumption and a cause utilisation rates to fall. Europe will move to a net export position and CMAI expects regional imbalances to even out. BASF's scrap and build project at Ludwigshafen will be complete by mid-2002, with a small production increase to 550 000 tonne/year. Lyondell/Bayer's 635 000 tonne/year unit at Rotterdam will start up in 2003. Dow has delayed plans for a 575 000 tonne/year plant on the US Gulf Coast, but is considering a jv plant with BASF in Brazil. BP is said to be planning a 500-600 000 tonne/year plant in the US to start up in late 2003/2004. Several new projects in Asia and the Middle East are being studied/planned for post 2003.

EUROPEAN STYRENE CAPACITY, '000 TONNE/YEAR

Company	Location	Capacity
Western Europe
Atofina	Carling, France	330
	Gonfreville, France	390
BASF	Antwerp, Belgium	500
	Ludwigshafen, Germany	510*
BP	Marl, Germany	350
Dow	Bohlen, Germany	280
Chemical	Terneuzen, T3	500
	Netherlands
	Terneuzen, T4	500
	Netherlands
DSM	Beek, Netherlands	27
Ellba	Moerdijk, Netherlands	550
EniChem	Mantova, Italy	420
	Mantova, Italy	180
	Hythe, UK	60
Repsol	Puertollano, Spain	140
	Tarragona, Spain	340
Shell	Moerdijk, Netherlands	440
Chemicals
Eastern Europe
Arpechim	Pitesti, Romania	30
Dwory	Oswiecim, Poland	100
Kaucuk	Kralupy, Czech Rep	130
Lukoil	Burgas, Bulgaria	40
Neftochim

*capacity reduced due to scrap and build project Source: CMAI

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