European chemical profile: Propylene

Source: ECN

2009/12/07

USES
The primary outlet for propylene is polypropylene (PP), which accounts for about 64% of global consumption. Other important derivatives are acrylonitrile, oxo alcohols, propylene oxide, cumene and acrylic acid.

SUPPLY/DEMAND
Demand in Europe is set to decrease this year on last year's level, which was also down on 2007. Early estimates are that demand into PP will be down by about 10% this year on last.

A catastrophic quarter four (Q4) 2008 and Q1 2009 forced many producers to idle capacities, although most plants are now running. Operating rates for 2009 are said to average 80-85%.

Long supply then tightened in May because of reduced operations, a move to lighter feedstocks and improved demand driven by good export opportunities mainly to Asia for propylene and its derivatives. Although export opportunities dried up in September/October, they reappeared in November and December helping to balance European operations.

In June, French producer Total suffered an explosion at its steam cracker in Carling. The plant is scheduled to restart in Q1 2010.

West European propylene production from January to September 2009 was 10.65m tonnes, down from 11.82m tonnes for the same period in 2008, according to the Association of Petrochemicals Producers in Europe (APPE).

PRICES
European contracts have largely shifted from quarterly settlements to monthly.

January saw a historic fall of €523/tonne to €430/tonne as naphtha weakened and derivative demand plunged. Contracts then climbed steadily until September as availability tightened but have declined again in the past three months, with December contracts settling down by €10/tonne at €740/tonne.

Spot prices peaked at €800/tonne in late August/early September, and have held fairly steady since then at around €700/tonne, with reported spot activity being virtually non-existent.

Spot cracker margins based on naphtha have been barely positive this year, although contract cracker margins have seen periodic gains.

TECHNOLOGY
The two main sources of propylene are as byproducts from the steam cracking of liquid feedstocks such as naphtha, and from offgases produced in fluid catalytic cracking (FCC) units in refineries.

The remainder is produced using on-purpose technologies such as propane dehydrogenation (PDH) and metathesis. Smaller amounts of propylene can be obtained from cracking propane and butane.

The cracking of liquid feedstocks is the predominant route in Europe and Asia.

As demand for propylene is growing faster than ethylene and more ethane crackers (which produce no propylene) than naphtha crackers are being built, on-purpose technologies are being increasingly used.

The main on-purpose route is PDH but the main disadvantages of this process are relatively high capital costs and the need for a long term, low-cost supply of propane such as in the Middle East. New processes are being developed that claim to lower capital and operating costs.

Much effort is being put into increasing output from liquid steam crackers and FCC units, for example by metathesis which is the catalytic conversion of ethylene and butene-2 into propylene. But these units need access to large C4 streams that are free of isobutylene and butadiene.

US producer ExxonMobil and Germay's Lurgi have developed olefins interconversion technologies. Methanol-to-olefins (MTO) technology, normally used to boost ethylene output, can increase propylene production to 45% of total output.

Methanol-to-propylene (MTP) technology has been developed and is being used in China converting methanol from coal to PP. A first plant in China was due to start up in late 2009, and a second project in China is slated to go on stream in 2010.

An integrated PP complex using MTP technology is proposed in Trinidad for late 2012.

More on-purpose technologies are under development and there is a growing emphasis on on routes to "green" or bio-propylene.

OUTLOOK
Future world trade for propylene is changing significantly, with a buildup in on-purpose propylene, as well as PP capacity, mostly targeted for the export market. Over the next five years, global consultancy CMAI says the Middle East will move from a net importer to the largest net exporter of propylene, with Western Europe becoming a net importer.

The large amount of new ethylene production in the Middle East and Asia will pressure steam cracker margins in Europe, forcing the closure of high-cost capacity. Very little or no investment is expected in European refinery propylene.

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WEST EUROPEAN PROPYLENE CAPACITY*, '000 TONNES/YEAR

Company Location Capacity
AP Feyzin Feyzin, France 180
BASF Antwerp, Belgium 650
Ludwigshafen, Germany 340
BASF Sonatrach PropanChem Tarragona, Spain 350
Borealis Porvoo, Finland 225
Stenungsund, Sweden 250
BP Refining & Petrochemicals Gelsenkirchen, Germany 605
Dow Chemical Böhlen, Germany 270
Tarragona, Spain 330
Terneuzen, the Netherlands 920
ExxonMobil ND de Gravenchon, France 300
Fina Antwerp Olefins Antwerp, Belgium 715
INEOS Olefins & Polymers Europe Cologne, Germany 655
Grangemouth, UK 395
LyondellBasell Industries Berre, France 230
Munchmunster, Germany 210
Wesseling, Germany 475
Naphtachimie, Lavéra, France 540
Noretyl Rafnes, Norway 85
NSP Olefins Antwerp, Belgium 540
OMV Burghausen, Germany 560
Schwechat, Austria 400
Polimeri Europa Brindisi, Italy 230
Dunkirk, France 180
Porto Marghera, Italy 245
Porto Torres, Italy 120
Priolo, Italy 440
Repsol Polimeros Sines, Portugal 200
Repsol YPF Puertollano, Spain 125
Tarragona, Spain 290
SABIC Europe Geleen, Netherlands 675
SABIC UK Petrochemicals Wilton, UK 400
Shell & DEA Oil Heide, Germany 50
Wesseling, Germany 280
Shell Chemicals Moerdijk, Netherlands 480
Total Petrochemicals Carling, France** 190
Gonfreville, France 275
SOURCE: ICIS PLANTS & PROJECTS
* excludes refinery propylene
** restart Q1 2010

Profile last published June 26, 2006

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