OUTLOOK ’19: Europe aromatics market eyes supply amid cracker, styrene turnarounds

Helena Strathearn

24-Dec-2018

LONDON (ICIS)–With demand for benzene and styrene expected to grow in line with GDP, the key subject for the aromatics market in 2019 will be supply due to a series of planned turnarounds slated for the spring.

Starting in January and February, two to three styrene outages are likely, with at least one expected in the US and another in the Middle East.

A few turnarounds in Asia are slated for March.

However, it will be in the spring (March-May) that the largest impact on planned maintenance is expected.

Some of the outages will be extensive, with some of them requiring two months’ worth of down time.

Approximately three styrene producers are likely to carry out their routine maintenance in April and May 2019.

The producers being out all at the same time could cumulatively remove a significant volume of styrene production from the market as annually these sites produce around 1m tonnes of styrene.

Sources have also mentioned potential planned maintenance in Europe in the autumn (September-November).

BENZENE
A series of cracker turnarounds mostly taking place in the spring are also expected to reduce the total available volume of benzene.

However, the market expects the impact of these turnarounds to be mitigated to an extent by the reduced output of key derivative styrene at that time.

These benzene outages should not have a great impact as they are planned, allowing market players to prepare ahead for them, but potential delayed restarts could indeed tighten supply.

Low water levels on the northwest Europe key transport route the River Rhine have complicated logistics in the aromatics markets for most of the second half of 2018, and are expected to continue to do so at the start of 2019.

The logistics woes in 2018 were aggravated by a shortage of truck drivers, as deliveries moved from the Rhine to alternative transport methods.

The styrene market will continue to adapt in 2019 to new trade flows after China imposed anti-dumping duties (ADD) on US material of between 13.7-55.7%.

The ADD rate has been effective since the middle of 2018, and will remain in place for five years.

The duties resulted in imports from the US coming to Europe instead, a factor nearly balanced by exports from Europe to China.

China is moving towards styrene self-sufficiency, with production capacity expected to hit over 13m tonnes/year in 2021.

There are some investments in aromatics expected in 2019 and beyond, with new supply of benzene, toluene and xylene (BTX) coming from new refineries and refinery upgrades, as well as additional naphtha crackers.

By far the biggest outlet for benzene remains styrene, but methyl di-p-phenylene isocyanate (MDI) and cyclohexane (CX) are two of the faster growing benzene derivative sectors.

With less growth expected, but with a greater share of the market than MDI and CX, are cumene and phenol.

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

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

Focus article by Helena Strathearn

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