Benzene is the largest-volume aromatic used to produce a number of petrochemical intermediates such as ethylbenzene for styrene production, cumene for phenol and acetone, cyclohexane and nitrobenzene.
Ethylbenzene is the largest chemical outlet for benzene at around 52% and nearly all is consumed in the production of styrene. Major markets for styrene include polystyrene (PS), expandable polystyrene (EPS), styrene copolymers (such as acrylonitrile-butadiene-styrene (ABS) resins, styrene-acrylonitrile (SAN) and styrene-butadiene latexes), styrene-butadiene rubber (SBR) and unsaturated polyester resins.
Around 43% of styrene is used in the manufacture of polystyrene, representing almost a quarter of benzene demand. Historically, growth in PS had been good but it was hit hard by the global recession and has not recovered to previous levels in North America and western Europe. In addition, high benzene prices have forced PS prices to a level where demand has suffered.
US-based consultants CMAI forecast that world styrene demand will grow at an average of 3%/year over the next five years. Demand growth in the US and Europe will remain fairly flat while Northeast Asia, and especially China, account for the growth in demand.
The second largest outlet for benzene, accounting for 19% of demand, is cumene which is nearly all consumed in phenol production with acetone formed as a coproduct. Historically, demand for phenol was driven by phenolic resins but this market has matured and been overtaken by bisphenol-A (BPA).
The strong demand for polycarbonates, historically at 10%/year and above, has driven BPA production. The rising popularity of DVDs and CDs accounted for much of the growth of polycarbonates but this is now slowing as CDs are being replaced by MP3 players, high internet bandwith and USB drivers.
The maturing of the polycarbonate industry will impact the growth in phenol demand. CMAI expects phenol demand growth will slow to an average of 4%/year to 2011.
The third largest outlet for benzene, accounting for 13% of demand, is cyclohexane which finds its way primarily into the nylon chain via caprolactam and adipic acid. Cyclohexane demand is growing only slowly while hydrogen availability is becoming an issue.
The fourth main derivative of benzene is nitrobenzene, which can be used to make aniline. This is one of the faster growing derivatives of benzene, driven by the demand for polyurethanes.
Benzene is used to make a number of other chemical intermediates such as alkylbenzene used in detergents, maleic anhydride (unsaturated polyester resins) and chlorobenzenes (engineering polymers).
In 2007, CMAI expects global benzene demand will be almost 40m tonnes with over 70% being consumed in the production of ethylbenzene for the styrenics industry and cumene for the phenolics sector. CMAI forecasts an average global growth rate in demand of slightly over 3%/year in the 2006-2011 period which equates to 1.3m tonnes of additional demand each year.
Global benzene markets have seen considerable tightness in supply since 2004. One of the reasons is that excess supply in the late 1990s reduced profitability and removed the incentive to invest in new benzene capacity. Since 2000, there has been little new benzene capacity installed globally.
However, the recent market tightness led to a high level of profitability for the industry with a major increase in capacity growth now being planned and implemented. The majority of the new capacity will be installed in the Middle East and Asia, in particular Saudi Arabia, China and Thailand.
According to CMAI, around 9m tonnes/year new benzene capacity will be added in the 2007-2010 period. This will be double the amount of capacity than is needed by downstream products.
There are two main sources of growth for benzene supplies – benzene extracted from pyrolysis gasoline (pygas) in steam cracker complexes and benzene extracted from reformate in refineries.
In Asia, there is a move towards heavier feedstocks in steam crackers in order to increase the focus on propylene production. The secondary effect is to increase pygas production and consequently benzene output.
The increase in gasoline consumption in Asia is also leading to an increase in benzene production as a byproduct from reformate. CMAI estimates that around 3.1m tonnes/year of new benzene capacity in Northeast and Southeast Asia will come from reformate over the next five years.
In the Middle East, CMAI calculates that 1.5m tonnes/year of new benzene capacity will be added in the 2007-2011 period. In addition, the limited future availability of ethane will lead to the cracking of increasing quantities of naphtha and condensates yielding more pygas and benzene.
Benzene from on-purpose units such as hydrodealkylation (HDA) plants will gradually decline as the production economics of these units lose competitiveness, according to CMAI. HDA plants will then take a more traditional role of being an incremental source of production.
As benzene capacity is being added more quickly than it can be consumed, operating rates will fall to around 80%. However, CMAI points out that operating rates will still remain relatively high compared to historic levels.
Benzene prices will also start to ease and the delta over naphtha prices reduce. On a long term basis, CMAI expects benzene prices to return to their more traditional relationship with the cost of production.
Updated: March 2007. Sources: 2007 CMAI World Petrochemical Conference, 21-22 March 2007, Houston, Texas.
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