Maleic anhydride

08 April 2002 00:00 [Source: ICB]

European demand is weak and production rates have been cut. Players are hoping growth will recover in the second half of this year

Uses

Maleic anhydride (MA)'s main use, with over 50% of consumption, is unsaturated polyester resins (upr). The second biggest outlet, and the fastest growing, is 1,4 butanediol (BDO) and derivatives tetrahydrofuran (THF) and gamma-butyrolactone (GBL). Other uses for MA are in plasticisers, surface coatings, agrochemicals, lubricants, fumaric acid and malic acid. MA is available in either liquid (molten) or solid (flake) form.

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Supply/demand

The European market remains depressed with weak demand and structural oversupply. Operating rates have been cut to match reduced demand and some benzene-fed lines have stopped production. Less Asian imports are also present. Last year's slowdown deepened in quarter four and into quarter one and prices slumped by an average 10%. Demand growth in Europe last year for upr was at best flat or showed a slight decline, but is expected to recover this year and turn in growth of 1%. Players report no firm signs yet of any improvement in demand but are optimistic for a better second half year. BASF's acquisition of Sisas in July 2001 has also impacted the market, as improved operations at the plant in Feluy, Belgium, led to product appearing on the merchant market, pressuring prices and igniting fresh competition for sales. Completion of PPM Ventures' purchase of Lonza's polymer intermediates business has been delayed to first half 2002.

Pricing

Europe settles contracts on both a quarterly and monthly basis. The first quarter contract is reported in the range E800-840/tonne with the March monthly settlement slightly lower. Producers will seek a price increase in April and quarter two to restore margins which are very low and have worsened recently as benzene feedstock costs soar. An initial second quarter benzene contract has settled, up by E161/tonne. Butane prices are also rising as crude oil and natural gas values move up.

Technology

MA is produced by the oxidation of benzene or butane. Although the butane-based process is said to have superior economics and is the preferred route, Lonza claims its fixed bed benzene route is competitive in low cost revamps and medium-sized plants. MA can be made from butane in either fixed or fluidised bed processes. Integrated butane-to-BDO technologies have been developed by Huntsman and BASF with Kvaerner, and BP/Lurgi. Scientific Design has developed chloride-free catalysts for MA production in fixed bed reactors. The catalysts are being toll-manufactured by Lonza. BOC Gases and Mitsubishi Chemical have developed a new technology, Petrox, which has been operated on a large-scale pilot plant in Japan. The process uses a selective hydrocarbon separation system to recover and recycle unreacted butane and allows MA to be produced at low butane conversion to maximise selectivity and yield. BOC claims reductions of 10% in capital costs and 20% in raw material costs.

Health and safety

MA occurs as white crystalline flakes which have a strong acrid odour. A decomposition-polymerisation explosion hazard can occur in the presence of alkalis at temperatures above 150ûC. MA is toxic and an irritant to the skin and mucous membranes.

Outlook

Asia, particularly China, is the main region for future growth. Chinese demand for upr is rising and new upr plants are due to start production in 2002/2003, requiring more MA. The Middle East is also a growing market and Saudi Arabia and the UAE have increasing import requirements. Huntsman's joint venture MA/BDO plant in Saudi Arabia is due onstream in second quarter 2004, but its 41 000 tonne/year Mexican project, which was due end 2000, is now on hold. BDO growth is still forecast at double digit rates. Future plant closures in Europe are still considered a possibility.

MALEIC ANHYDRIDE CAPACITY, '000 TONNE/YEAR

Company	Location	Capacity
Aekyung Petrochemical
	Ulsan, South Korea	8
Ashland	Neal, West Virginia, US	43
	Neville Island,
	Pennsylvania, US	20*
Bartek	Stoney Creek,	27
Chemical	Ontario, Canada
BASF	Feluy, Belgium	225
	Ludwigshafen, Germany	3
Bayer	Baytown, Texas, US	60
BP	Joliet, Illinois, US	45
Condea-Huntsman
	Moers, Germany	56
Cray Valley	Drocourt, France	15
Derivados Maleicos
	Puebla, Mexico	7.5
DSM	Linz, Austria	36
Grand Union	Lin Yuan, Taiwan	25
Huntsman	Pensacola, Florida, US	110
KBK	Lukavac, Bosnia	10
Korea PTG	Ulsan, South Korea	25
Lonza	Ravenna, Italy	50
	Bergamo, Italy	36
MOL	Szazhalombatta, Hungary	13
Orgachim JSC	Ruse, Bulgaria	1
Pankang Industrial
	Panjin, China	10
Petrobrazi	Brazi, Romania	12
Polioli, Italy	Vercelli, Italy	36
PT Justus Sakti Raya
	Jakarta, Indonesia	14
PT Petrowidada
	Gresik, Indonesia	1.8
Repsol YPF	Ensenada, Argentina	17
Shandong Shengli Oilfield Petrochemical
	Dongying, China	15
Tasco Chemical
	Lin Yuan, Taiwan	20
TCL Industries	Teluk Kalung, Malaysia	35
Yongsan Chemicals
	Ulsan, South Korea	40
Zaklady Azotowe Kedzierzyn
	Kedzierzyn-Kozle, Poland	7

* idled since Nov 2001Source: ECN/CNI

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