OUTLOOK ’22: Asia benzene rides on optimism from new start-ups despite Omicron worries

SINGAPORE (ICIS)–The sentiment in Asia’s benzene market for the first half of 2022 remains cautiously optimistic on concerns over the impact of the spread of the Omicron coronavirus variant amid a slew of new regional capacity start-ups in derivative sectors.

Market players have set realistic expectations given the fluctuating and ever-changing economic forecasts and state-imposed restrictions due to Omicron.

“In Q4 2021, some start-ups in China were delayed due to the dual control policy. For 2022, we are worried about potential delays should there be lockdowns as Omicron spreads,” said a China-based importer.

The International Energy Agency (IEA) earlier in December lowered its Q1 crude demand forecast by 600,000 barrel per day (bbl/day). This follows the swift and extensive movement control across Asia and Europe, despite Omicron’s relatively new emergence.

China’s Zhejiang has issued a shutdown of factories affecting production of a wide range of products – from medicine to chemicals such as intermediates, polyesters, dye stuff and agents.

In the near-term, the upcoming Winter Olympics could result in state-issued regulation on chemical production to improve air quality in Beijing and the surrounding areas.

Meanwhile, the benzene market is expected to see an uptick in new capacities next year. Downstream sectors will also see an increase in new capacities in 2022.

REGIONAL BENZENE EXPANSIONS

Company	Location	Capacity (‘000 tonnes/year)	Start-up time
Shenghong Refining and Chemical	Lianyungang, China	1,060	Q1 2022
Shandong Yulong PC	Longkou, China	808	Q1 2022
PetroChina Guangdong Petrochemical	Jieyang, China	200	Q2 2022
Rizhao Lanbridge Port PC	Rizhao, China	170	Q3 2022
HPCL/Mittal Energy	Phulo Khari, India	79	Q1 2022
Long Son	Long Son, Vietnam	350	H2 2023
KPIC	Al Zour, Kuwait	480	H2 2023
ADNOC	Ruwais II, United Arab Emirates	505	H2 2023
ExxonMobil Chemical	Huizhou, China	300	Late 2024

In October 2021, the market bid farewell to Japan’s ENEOS’ Chita-based plant, which produces 216,000 tonnes/year of benzene. The decision was made in view of the structural decline in demand for petroleum products in Japan and in Asia as a whole.

REGIONAL BENZENE MAJOR DERIVATIVE EXPANSIONS

STYRENE MONOMER (SM)
Company	Location	Capacity (‘000 tonnes/year)	Trial runs
Wanhua Chemical	Yantai, China	650	End Dec 2021
Lihuayi	Shandong, China	720	End Dec 2021
ZRCC Lyondell Chemicals	Zhenhai, China	630	End Dec 2021
Dagu Chemical	Tianjin, China	500	Q1 2022

Some SM and styrenic plants are also slated to start beyond Q1 2022.

Zhejiang Petroleum and Chemical (ZPC)’s phase II phenol plant is expected to kickstart the slew of capacity additions from end-2021. ZPC II’s commercial production is expected in early 2022.

As such, projections for benzene are more optimistic for China as compared with other regional markets.

According to ICIS Supply & Demand Database (SnDD), projected consumption in South Korea is revised down by 142,000 tonnes in 2022, a drop by about 3.5% year-on-year. The utilisation rate is expected to stay close to 90%.

For China, 2022’s projected consumption is revised upwards by 1.61m tonnes, up by nearly 8.7% year-on-year. The utilisation rate is expected to stay at 69%.

Projected consumption within southeast Asia is expected to be largely similar in 2022, as compared with 2021. The utilisation rate is expected to dip by about 3% to 74%, considering the regional turnarounds.

REGIONAL H1 2022 PLANNED MAINTENANCE*

Company	Location	Route	Capacity (kta)	Timing
Fujian Refining & Petrochemical Company	Quanzhou, China	Reformate	80	1 – 10 January
Sinochem	Quanzhou, China	TBC	TBC	1 – 20 January
Sinopec Maoming	Maoming, China	Reformate	210	20 February -16 April
Sinopec Hainan	Yangpu, China	Disproportionation, reformate	200	23 February – 30 April
Sinopec Yangzi	Nanjing, China	TBC	Around 160	24 March – 18 May
Nippon Steel Chem	Oita, Japan	Reformate, coal, pygas	205	Early February – early April Almost two months
Petronas	Kerteh, Malaysia	Reformate, disproportionation	200	February – March Up to 50 days
GS Caltex	South Korea	Disproportionation	420	Mid-September – October Around 50 days
Tosoh	Yokkaichi, Japan	Pygas	154	Early March – H2 April Around 50 days
ENEOS	Kawasaki, Japan	Pygas	111	Q1 2022
Sinopec Zhenhai	China	Reformate, disproportionation	Around 220	30 March – 8 July
PTTGC	Map Ta Phut, Thailand	Reformate, pygas, disproportionation	475	May 30 days
Taiyo	Kikuma, Japan	Transalkylation C9+, reformate	300	May – June Almost 2 months
Mitsui	Osaka, Japan	Cracker	130	June – July Almost 40 days
S-Oil	South Korea	Reformate	110	June, 45 days
SKGC	Inchon, South Korea	Reformate	455	Mid-September, 45 days
Idemitsu Kosan	Tokuyama Japan	Pygas	274	September – October
IRPC	Rayong, Thailand	Pygas, reformate	115	October – November
FCFC	Mailiao, Taiwan	Reformate, pygas,  disproportionation	250+350	Q4, 1 month

Source: Market sources
*Subject to changes.

Focus article by Angeline Soh