Benzene 2019 onwards - growth in key derivatives to provide some outlet for additional supply

Source: ICIS News


LONDON (ICIS)--Investment and new capacity in paraxylene (PX) will result in more supply of by-product benzene, but that extra volume will have additional outlets in some key derivative sectors.

Speaking at the 17th World Aromatics and Derivatives Conference in Amsterdam this week, Rob Peacock, Consultant at ICIS, said growth downstream would help absorb some of the additional benzene and that indeed extra benzene was needed.

- Over 600,000 tonnes of surplus benzene could come onstream by 2022

- MDI and CX markets show fast growth levels

- Growing population contributing to ongoing strength in PX demand

Peacock said that from 2019 onwards there would be investments in aromatics and new supply in BTX (benzene, toluene, xylene) from new refineries and refinery upgrades, as well as additional naphtha crackers.

Investments in primary aromatics are expected to take place in China in the form of integrated refinery and petrochemicals units, while PX investments should be seen in the Middle East, with further projects in Saudi Arabia and Kuwait.

From around 8m tonnes of proposed new benzene capacity, over 600,000 tonnes of surplus benzene supply could come onstream over the period to 2022.

The additional supply that is likely to result in Asia as a result of the new capacity will mostly have outlets downstream, while the export markets of the US and Europe were not really seen as growth engines.

Additional capacity is required in the methyl di-p-phenylene isocyanate (MDI) chain to meet growing demand; over 2.5m tonnes of additional MDI capacity is planned for 2019-2023.

The cyclohexane (CX)/polyamide chain and phenol/acetone markets have seen rapid investment in China and the rest of Asia in recent years, however recent caprolactam (capro) developments in China have been delayed.

By far the biggest outlet for benzene remains styrene, but MDI and CX are a couple of the faster growing benzene derivative sectors, and then with less growth but a greater share of the market than MDI and CX is cumene / phenol.

For isocyanates, global investments in Europe, the US and Asia have been announced or are expected to meet growing demand downstream, and there are also plans in that market to upgrade or replace older units.

Similar investments or projects are planned for cumene/phenol in Europe, and there is potential for styrene investments in the Middle East, North Africa and South America, as well as in China.

Growing demand for PX is driving these new investments as purified terephthalic acid (PTA) demand for polyester manufacturing continues on a healthy growth trajectory.

Population growth and increased GDP and consumer spending power behind continued growth in PX/polyester demand.

Much of this prospective capacity is in China, as part of new, more complex refineries and as such we will see increased fuels production, Peacock explained.

“China could therefore become more self-sufficient for aromatics and fuel,” he said.

However, the likelihood of delays to 2019 benzene additions could smooth out the imbalance over the next four years.

Additional demand

>5m tonnes from ethyl benzene (EB)/styrene monomer (SM)

>1m tonnes from nitrobenzene (NBz)/MDI

0.9m tonnes from cumene/phenol

The longer term impacts of hybrid/electric vehicles will only shift the importance of petrochemicals to refineries as these vehicles are likely to still use significant volumes of polymers in seating, interior and exterior trim, etc.

Peacock explained that as such, there is growth forecasted in reformate demand for aromatics compared to gasoline. Global aromatics production is relatively small compared to current fuels production; but sufficient naphtha production is key to new investments.

On transportation, this will affect both upstream and downstream. Less fuel demand should mean more petrochemicals feedstock, so that might bring lower prices. It raises the question of whether there will be less oil market dependence, less under-the-hood engineering plastics.

Peacock concluded that in recent times, the market has seen healthy margins and decent growth, but that some headwinds are on the way.

The conference ran from 7-8 November.

Focus article by Helena Strathearn

Source: ICIS Supply & Demand Database