Price and market trends: US benzene market offers opportunity for chemical companies

23 June 2014 00:00 Source:ICIS Chemical Business

The US benzene market offers a great opportunity for chemical companies with a focus on aromatics rather than ethylene, an industry advisor said on 11 June.

“You’ve got a guaranteed market and a guaranteed feedstock,” Paul Hodges, chairman of chemical industry advisors International eChem, said during the second annual ICIS US Aromatics & Derivatives Conference in Houston.

Demand for gasoline is declining in the US due to higher fuel efficiencies and less miles driven.

Aging baby boomers, who powered growth in the gasoline industry in the last several decades, have been driving less. Hodges said a typical 76-year-old drives 60% less than when in his or her 40s.

US benzene

The younger generation is more open to alternatives, such as ride-sharing programmes. Each vehicle in a ride-share programme takes about 32 vehicles off the road, Hodges said.

Additionally, fuel efficiencies of new cars are improving, which makes them less expensive to own and more attractive to car buyers, since recently used vehicles are not much cheaper.

While gasoline, and therefore oil, demand is stagnating in the US, there has been no disruption in the supply of oil.

Worldwide crude inventories have been rising even as prices have increased.

Although oil has six times the energy of natural gas, the high price of oil has pushed demand for natural gas fuels and further eroding gasoline demand. Even school bus fleets, “one of the slowest moving markets” have been making the switch to compressed natural gas fuels, Hodges said.

With a lot of crude oil in the US and a ban on exporting it, the slowdown in domestic gasoline demand means a lot of gasoline is being refined for export. But cracker operators and refiners have not been concentrating on producing aromatics.

“Benzene is a byproduct industry,” Hodges said.

A chemical company with a focus on aromatic production through catalytic reformers at refineries and other technologies could find a large market for benzene in the US.

The country imports about 600,000 tonnes/year from northeast Asia, Hodges said.

NEW AROMATICS SOURCES

Also at the conference consultants said the US may seek new sources of aromatics because demand is rising faster than production.

Typically, the US has produced most of its aromatics from cracking naphtha and from catalytic reformers in refineries.

However, US crackers are using lighter feeds, and this has reduced production of pyrolysis gas (pygas), from which benzene and other aromatics are extracted.

Ethanol blending mandates have affected operations at catalytic reformers, discouraging aromatics production.

Some companies are exploring ways to produce aromatics from biological processes, said Ramanan Krishnamoorti, chief energy officer at the University of Houston.

If the aromatics market gets tight enough, then these new technologies could become attractive, Krishnamoorti said. However, the technology still needs better catalysts, he said, which are probably a generation away.

Another alternative is UOP’s Cyclar technology, which can convert propane and butane into aromatics. However, these Cyclar units also produce about 35% fuel gas by weight, said Daniel Lippe, managing partner for Petral Consulting. The US already has a lot of gas.

Chevron Phillips Chemical (CP Chem) offers its Aromax Process technology, which uses conventional fixed-bed reforming equipment to produce benzene on purpose.

US MAY SUPPLY METHANOL TO CHINA COAL-TO-CHEMS INDUSTRY

The US could supply feedstock methanol to China’s growing coal-to-chemicals industry, a consultant said on 12 June.

China currently produces methanol through gasifying coal. The resulting synthesis gas (syngas) is used to make methanol, a derivative for aromatics and olefins.

China already has several methanol-to-olefins (MTO) plants, said Alex Yu, senior consultant for ICIS Consulting, China. The technology has now matured sufficiently to make methanol-to-aromatics (MTA) production feasible, Yu said.

Also, coal producers are eager to convert their product into higher margin, downstream derivatives such as aromatics, he said.

Other factors are also favourable to MTA production, Yu said.

The Chinese government is eager to boost economic growth, which has fallen from a peak of 14.2 percent in the last decade to the current rate of about 7.5%, Yu said. Also, the Chinese government is now supporting coal-to-chemicals development.

Meanwhile, in the US, the advent of shale gas has made it profitable for the country to produce methanol from natural gas.

Already, multinational company Northwest Innovation Works has announced plans to build three methanol plants in the northwest US.

“Methanol can be a bridge to the Pacific ocean,” Yu said.

China is already considering the US as a source of propane for the country’s propane dehydrogenation (PDH) plants, he said.

“China and the US can have a lot in common in the future,” Yu said.

Coal-to-aromatics plants do face some challenges, Yu said.

The process uses a lot of water, which is scarce in the regions where China has a lot of coal, he said.

Also, many in China have protested paraxylene (PX) plants because of environmental concerns, he said.

By Jessie Waldheim Al Greenwood