The main consumer for ethylene glycol (EG) is polyester for use in fibers, films and polyethylene terephthalate (PET) resin. In 2007, polyester fibers consumed about 52% of world output. The second-largest use is in PET resin, followed by automotive antifreeze.
Minor applications include deicing fluids and surface coatings, and as an ingredient in photographic developing solutions, hydraulic brake fluids, some unsaturated polyester resins (UPR), and inks. High-purity EG is used as a solvent.
Global markets in 2007 started with prices in Asia around $915/tonne and slowly rising, underpinned by good demand in China. European demand was equally satisfactory and prices rose reflecting Asian movements. Reduced output in Saudi Arabia in August boosted prices to much higher levels.
But prices fell sharply in early 2008 as demand collapsed, despite tight supplies and low producer inventories, and have not recovered so far. Margins have fallen to very low levels as costs moved up sharply. The EG industry is now at the bottom of trough economics the large Middle Eastern plants have not yet started up, and some may not do so until well into 2009.
UK consultancy PCI estimates global production in 2007 at 17.8m tonnes, up by 5.4% on 2006. Western Europe's production is estimated at 1.4m/tonnes, 7.8% of the total. Plant utilization in Europe was 77% and rates are expected to fall sharply in 2009-2011 under the pressure of Middle East imports.
European contract prices for fiber grade rose steadily in 2007. Spot prices also climbed consistently, cresting at €1,040-1,100/tonne FOB in October, then slipped sharply to the €700s/tonne, before firming again. Current European contracts are €880/tonne, with prolonged negotiations expected for July.
Asian spot prices were over $1,500/tonne CFR in the fourth quarter (Q4) of 2007, before falling by more than $500/tonne during Q1 2008. Current spot levels are around $1,100/tonne CFR China, a level where several Asian producers are losing money. Producers posted $1,260/tonne CFR Asia for July contracts.
The early route by the hydrolysis of ethylene oxide (EO) via ethylene chlorohydrin, has been superseded by the direct oxidation of ethylene in the presence of oxygen or air and a silver oxide catalyst. A crude EG mixture is then produced by the hydrolysis of EO with water under pressure. Fractional distillation under vacuum separates the monoethylene glycol (MEG) from the higher glycols.
Other processes have been researched, with the reaction of ethylene and carbon dioxide to yield ethylene carbonate, followed by hydrolysis. This has been scaled up into one plant in Korea, with others planned. Other processes talked about include one based on corn products.
PCI puts global demand growth at 5.3%/year for 2007-2015. Rising demand from polyester and PET means that one to two world-scale EG plants are needed every year if a shortfall is to be avoided. But PCI believes there could be a serious oversupply in 2009-2011, as large amounts of new capacity are planned or being built for then.
Changes in technology have led to step changes in capacity increments, leading to a higher probability of a long market for a longer period of time. Several plants are proposed in the Middle East and Asia by 2009, pushing the sector into a surplus that could last for three or more years.
Rationalization is expected in regions of high ethylene costs such as Asia, with some further mothballing or closures in Europe and the US. China will continue to dominate demand and will account for up to 58% of Asian demand and 46% of world demand by 2015. Western Europe will need more imports, as domestic output will focus on EO and derivatives, where EO values are usually higher and EG operating rates will fall as glycol production is minimized.
EUROPEAN ETHYLENE GLCYOLCAPACITY, '000 TONNES/YEAR
|Dow Chemical||Terneuzen, Netherlands||130|
|INEOS Oxide||Antwerp, Belgium||290|
|Lukoil Neftechim Burgas||Burgas, Bulgaria||100|
|PKN Orlen||Plock, Poland||110|
|Shell Chemicals||Moerdijk, Netherlands||160|
|SOURCE: PCI XYLENES & POLYESTERS|
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Profile last published January 24, 2005