Chemical profile: Europe butadiene

USES

The largest single use for butadiene (BD), also known as 1,3-butadiene, is in the production of styrene-butadiene rubber (SBR), which is principally used in the manufacture of automobile tyres. SBR is also used in adhesives, sealants, coatings and in shoe soles. Polybutadiene rubber (PBR) is also used in tyres and can be used as an intermediate in the production of acrylonitrile-butadiene-styrene (ABS). ABS is widely used in items such as telephones, computer casings and other appliances.

Other polymers made from BD include styrene-butadiene latex, nitrile rubber and styrene-butadiene block copolymers.

Chemical intermediates made from BD include adiponitrile and chloroprene which are used to make nylon and neoprene.

SUPPLY/DEMAND

In Europe, actual production over the last two years has hovered around the 1.9m tonnes mark, according to Petrochemicals Europe. 2013’s output of 1.925m tonnes was the lowest since 2009 and just over 75% of nameplate capacity. 2014 was a poorer year than was generally expected. SBR in particular performed very poorly because of overcapacity, the influence from soft natural rubber markets, and a cautious economic outlook had kept a lid on key Asian demand.

Europe however managed to avoid the worst of the price pressure. In the first half of 2014, planned and unplanned cracker and BD extraction unit outages constrained supply, and then in the second half the absence of tonnes from Shell’s Moerdijk unit in the Netherlands combined with healthy demand from European consumers partly because of the benefits a weak euro gave derivative producers for exports.

New capacity was added in 2013 with LyondellBasell expanding its Wesseling BD, and in 2014 OMV debottlenecked its Schwechat Austrian unit in Europe, although INEOS closed its Grangemouth, UK plant in the second quarter of 2014, a year earlier than it had originally planned. BASF added new capacity in Antwerp, Belgium in September 2014. The final capacity add-ons are due in 2015 – OMV’s unit at Burghausen is already running, according to sources, and Evonik’s new Antwerp unit is, at the time of writing, in the start-up phase. The last to come will be MOL-TVK’s unit at Tiszaujvaros in Hungary.

Europe was already in a net long position prior to the new capacities but so far this year, Europe BD prices have once again been boosted by supply constraints and maximised light feedstock cracking.

PRICES

Contract prices fell consistently though 2014 – partly on the back of the fall in global oil prices – and into the early part of this year. Contract prices reached a low of €575/tonne in February – the lowest price since a monthly contract price was introduced in 2011.

Domestic spot prices have held very closely to the MCP, although the second half of 2014 saw a wider gap between spot and contract emerge – attributed to low oil and the year-end timing. The May 2015 CP settled at €640/tonne.

TECHNOLOGY

Most BD is obtained as a by-product in the steam cracking of naphtha and gas oil to make ethylene and propylene. The feedstock determines the yield: light feedstock yields five times less BD than heavy feedstock.

Other processes include the dehydrogenation of purified n-butene or butanes from steam crackers or C4 refinery streams. A few companies are looking at bio-based routes – Versalis, Novamont, Invista, Genomatica, and LanzaTech.

OUTLOOK

Forecast demand growth for the next 3-5 years will be concentrated in the Middle East and Asia. The polybutadiene and SBR sectors will continue to lead demand growth with ABS the only other significant contributor.

Global BD demand growth remained relatively high in 2014 at almost 3% but is very much dependent on Asia. Aggregate global capacity increased by around 1m tonnes during 2014 with 60% of this in China and the remainder in various countries around Asia. Even so, average global operating rates remained above 80%. With the new units on-stream, European capacity will increase by 15% so it will remain the most important supplier to global markets and in particular to North America. Barring demand destruction through lower than anticipated economic growth, it is likely that new capacity investment will be required by 2017.