Butadiene

03 December 2001 00:00 [Source: ICB]

Current availability is high as consumption has been hit by the economic downturn. However, a lack of new capacity in the next five years could tighten global markets significantly

Uses

Butadiene is the primary raw material for synthetic rubber - styrene butadiene (SBR), polybutadiene (PBR), chloroprene and nitrile. SBR is the largest end-user accounting for 31% of global butadiene demand, followed by PBR at 28%. It is also used to make other elastomers such as styrene-butadiene latex, polymers and plastics such as acrylonitrile-butadiene-styrene (ABS) resins. Another outlet is the production of adiponitrile, which is converted to hexamethylenediamine, a key ingredient in nylon 6,6.

Supply/demand

Europe is a net exporter and North America, the world's largest importer of butadiene, is the major destination for European volumes. West European output rose by about 70 000 tonne to 2.09m tonne in 2000, compared to 1999, according to the Association of Petrochemical Producers in Europe (APPE). Production in the first half of 2001 has fallen by 0.4% to 1.05m tonne. The APPE says quarter three output has slipped to 478 000 tonne, against 515 000 tonne in quarter three 2000, a drop of 7.1%. The slowdown in the US, which has since been compounded by the 11 September attacks, has limited European shipments. In addition, Butachimie has not been running its adiponitrile plant in France at the new expanded capacity, and the shortfall in expected consumption has added to a lengthening market. A series of scheduled maintenance turnarounds at a number of European butadiene extraction units has done little to reduce availability, confirming the long market. Derivative demand is weak, particularly from synthetic rubber which is also suffering from substitution by low-priced natural rubber. Global synthetic rubber consumption declined by 0.2% last year, although western Europe showed moderate growth of 1.6% and central Europe and the CIS turned in growth of 5.3% and 3.8% respectively

Pricing

European contract and spot prices have plummeted this year. The first quarter contract settlement at E570/tonne has eroded to E403/tonne this quarter. Spot prices have more than halved from early January's range of $550-570/tonne fob NWE to $230-250/tonne fob NWE end November. US prices, which have a significant effect on European levels, have also dived. Monthly contracts have dropped continuously from 28 cent/lb in January to 16 cent/lb in December.

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Technology

The majority is sourced as a by-product in the steam cracking of naphtha and gas oil to make ethylene/propylene. Butadiene is extracted from the C4 cracker stream by extractive distillation where it is dissolved in an aqueous solution of a solvent and withdrawn from the bottom of a distillation column. In a second column, butadiene is separated from the solvent before final purification. The feedstock used to make ethylene determines the relative yield of butadiene - the heavier the feedstock, the higher butadiene production. Butadiene can also be produced by the dehydrogenation of butenes.

Health and safety

Butadiene is a non-corrosive, highly flammable and reactive gas/liquid. It forms explosive mixtures with air over a wide concentration and as its vapour is heavier than air, it can travel long distances and lead to flashback. Over exposure to the vapour can cause eye and lung irritation and unconsciousness and contact with the liquid burns the skin. It is listed as an A2 carcinogen.

Outlook

Future supply of butadiene is likely to remain short because of limited re-investment. Butadiene prices and margins have been too low to encourage new projects and margins for the largest derivatives, SBR and PBR, remain negative. Butadiene plants are expected to run close to design capacity, at least until the startup of Sabina Petrochemicals' new extraction unit in Texas, US. The 408 000 tonne/year unit is due to be commissioned in 2003. However, demand is set to continue to outstrip supply and the US will remain a significant net importer. CMAI consultancy says new capacity is being added at 2.5%/year but global demand will increase at an average rate of 4%/year to 2006. ABS and PBR will be the fastest growing derivatives at 5.2%/year and 4.3%/year respectively. The consultancy expects an improvement in derivative demand in western Europe and the US to emerge in the second half of 2002, and argues that the upturn could be sharp, as inventories are low.

EUROPEAN BUTADIENE CAPACITY, '000 TONNE/YEAR

Company	Location	Capacity
AP Feyzin	Feyzin, France	80
Arpechim	Pitesti, Romania	65
Atofina	Gonfreville, France	60
Basell	Wesseling, Germany	170
BASF	Mannheim, Germany	100
Borealis	Sines, Portugal	45
	Porvoo, Finland	25
BP	Grangemouth, UK	75
	Worringen, Germany	245
Dow	Böhlen, Germany	45
	Terneuzen, Netherlands	170
DSM	Geleen, Netherlands	120
EniChem	Ravenna, Italy	130
	Brindisi, Italy	120
ExxonMobil	ND Gravenchon, France	80
FSK	Zrenjanin, Yugoslavia	45
HICI	Wilton, UK	100
Kaucuk	Kralupy, Czech Republic	80
Lukoil Neftochim
	Burgas, Bulgaria	70
Marghera Butadiene
	Porto Marghera, Italy	65
Naphtachimie	Lavéra, France	120
OMV	Schwechat, Austria	50
Oxeno	Marl, Germany	145
Petro Borzesti	Borzesti, Romania	100
PKN	Plock, Poland	40
Repsol YPF	Puertollano, Spain	32
	Tarragona, Spain	120
Shell	Moerdijk, Netherlands	115
	Berre, France	80

Source: ECN/CNI

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