World demand is growing faster than supply as a large chunk of proposed new crackers will produce little propylene. New processes have emerged in a bid to plug the rising shortfall
Propylene consumption is dominated by polypropylene (PP) which accounts for about 60% of global demand. Other important derivatives are acrylonitrile, oxo alcohols, propylene oxide, cumene and acrylic acid. Smaller uses are in oligomers, isopropanol and fine chemicals.
In Europe, the market has tightened as unexpected cracker outages as well as routine maintenance hit production. Supply is expected to remain tight throughout quarter two as the turnaround season continues.
Demand is said to be good and has been better than expected in quarter one, particularly for acrylonitrile and oxo alcohols which are being pulled by strong Asian markets. PP demand is healthy but the full price increases have not been realised and output at some units has been curtailed by the lack of monomer.
The APPE figures show that west European propylene production reached nearly 14.8m tonne in 2003, up by nearly 700 000 tonne in 2002.
European propylene prices continue to strengthen. Spot prices have climbed to €610-640/tonne cif NWE and the second quarter contract price settled up €50/tonne at €525/tonne with the ratio to ethylene moving up to 0.86 from 0.81. Historically, the ratio has stood at 0.70-0.75, said a source. CMAI says that as propylene sourcing issues develop, propylene to ethylene ratios are expected to rise in all world regions.
Propylene is mainly sourced from the steam cracking of liquid feedstocks such as naphtha, and from off-gases in refineries’ fluid catalytic cracker (FCC) units. In Europe, the main source is from naphtha cracking. It is also co-produced in the steam cracking of gas oil and condensates, and to a lesser extent of propane and butane. Interest is growing in propane dehydrogenation but this route is only viable if a low-cost source of propylene is available.
Recent technology advancements include metathesis which uses ethylene and butene to produce propylene, deep catalytic cracking, higher olefins cracking and methanol-to-olefins. Currently in development is catalytic pyrolysis that has a significantly higher selectivity to propylene than traditional cracking of naphtha and can yield better returns.
Health and safety
Propylene is a colourless, flammable gas that forms explosive mixtures with air. It is usually handled commercially in liquid form and will cause freezing burns if in contact with skin or eyes. The gas is an asphyxiant in high concentrations.
Global demand is forecast by CMAI to grow at an average 5%/year, reaching 80.3m tonne by end 2010, a rise of nearly 23m tonne on 2003. The major issue is the growing shortage of propylene as not enough capacity is being added to keep up with demand growth. Propylene is growing faster than ethylene and is facing the impact from major investment in ethane crackers in the Middle East, as well as rapid demand growth for propylene and derivatives in Asia.
As a result, there will be more emphasis on propylene from refineries and ‘on-purpose’ production although steam cracker sources will remain the dominant source of supply. No new crackers are likely to be built in Europe with investment focused instead on stretching existing capacity. Expansions are planned at Noretyl and OMV in Austria for the second half of 2005. Poland’s PKN also plans a 200 000 tonne/year increase for 2005. The €200m propylene pipeline project in northwest Europe has been delayed while state subsidies are being investigated.
West European propylene capacity*, ’000 tonne/year
|AP Feyzin||Feyzin, France||180|
|Dow Chemical||Böhlen, Germany||225|
|Exxon Chemical||Fawley, UK||100|
|ExxonMobil||ND de Gravenchon, France||300|
|Fina Antwerp Olefins||Antwerp, Belgium||600|
|Huntsman Petrochemicals||Wilton, UK||400|
|NSP Olefins||Antwerp, Belgium||300|
|Polimeri Europa||Brindisi, Italy||230|
|Porto Marghera, Italy||245|
|Porto Torres, Italy||130|
|Repsol YPF||Puertollano, Spain||200|
|Sabic Euro Petrochemicals||Geleen, Netherlands||675|
|Shell & DEA Oil||Heide, Germany||60|
|* excludes output from refineries|