The styrene industry faces significant challenges

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This post was last edited by jordan569 on 2013-1-6 at 22:44. Global overcapacity: In 2008, the global production capacity for styrene was 31.074 million tons per year, of which North America accounted for 6.436 million tons per year, Western Europe for 6.927 million tons per year, Asia and the Middle East for 16.195 million tons per year, and South America for approximately 0.545 million tons per year. Table 1 shows the statistics of the main styrene producers and their production capacities in the world in 2008. In 2007, global styrene consumption was 26 million tons, of which Asia (excluding China) accounted for 31%, China for 21%, North America for 19%, Western Europe for 19%, Central/South America for 4%, Central/Eastern Europe for 4%, and the Middle East and Africa for 2%. Due to the slowdown in the world economy, the global demand growth rate for styrene is expected to decline from an average annual growth rate of 3.1% from 2002 to 2007 to 2.2% from 2008 to 2012. Asia will remain the main region for global styrene demand growth, but supply and demand are already close to self-sufficiency. North America is the largest export market for styrene. However, with the commissioning of facilities in the Middle East, North America’s control over the global styrene market will be weakened. Chevron Phillips’ 750,000 t/a styrene plant in Jubail, Saudi Arabia, came online in August 2008 and began exporting products in September. The 475,000 t/a styrene plant built in Shuwaikh, Kuwait, in collaboration between Dow Chemical and the Kuwait Petroleum Industries Company, is also set to come online at the beginning of 2009. By 2011, styrene exports from North America are expected to be reduced to meet only the demand of South America. Middle Eastern styrene has a clear price advantage in terms of production costs. The products from the newly commissioned facility will be primarily targeted at the Asian market, where they will hold an important position. The total global production capacity for styrene is expected to be around 36 million tons per year by 2011. In the coming years, the new styrene production capacity worldwide will be concentrated mainly in Asia and the Middle East, accounting for approximately 62.0% and 32.0% of the global increase in capacity respectively. With the commissioning of new facilities in Asia and the Middle East, there will be a significant surplus of capacity; it is estimated that by 2013, the global surplus of styrene capacity could reach 2.5 million tons per year. This will inevitably lead to a decrease in operating rates, and the styrene industry will remain in a state of low profitability until 2010. The planned new styrene production capacities in major foreign countries from 2009 to 2012 are shown in Table 2. Table 1: Major global styrene producers and their production capacities in 2008, in 10,000 tons per year. **Region/Company Name Capacity**: United States – Lyondell: 127.0; Novachem: 122.5; Cos-Mar: 113.4; DuPont Fluoropolymers: 95.3; Dow: 64.4; Westlake: 18.0. Canada – Shell: 45.0; Novachem: 43.0. Mexico – PEMEX: 15.0. Argentina – Petrobras Energia: 16.0. Brazil: 38.5. Belgium – BASF: 50.0. France – Carling (plant location): 33.0; Gonfreville-L’Orcher (plant location): 39.0. Germany: 118.0. Italy: 118.0. Netherlands – Dow Benelux NV: 100.0; Ellba: 56.5; Shell Netherlands: 44.0; Sabic Europe: 2.7; Lyondell Chemical Nederland B.V.: 63.5. Spain – Puertollano: 16.0; Tarragona: 46.0. United Kingdom – EniChem UK Ltd: 6.0. Czech Republic – Kaucuk: 17.0. Poland – Chemiczna Dowry: 11.9. Russia: 68.4. Iran: 69.5. Saudi Arabia: 185.0. Japan: 346.1. Indonesia – Styrindo Mono: 34.0. South Korea: 311.5. Malaysia – Idemitsu: 22.0. Singapore – Ellba: 55.0; Shell: 40.0. Taiwan, China: 189.0. Thailand: 50.0. Mainland China – CNOOC Sinopec Petrochemical: 56; Shanghai Sinopec Petrochemical: 50; Jiangsu Lishide Chemical: 42. Others: 169.4. Total global capacity: 3,107.4 tons per year.

Table 2: Planned additional styrene production capacities of major foreign companies from 2009 to 2012, in 10,000 tons per year. **Company Name** **Planned Additional Capacity** **Planned Commencement Date**: Kuwait Styrene Company – Kuwait: 47.5; early 2009. Iran Petrochemical Company – Iran: 64.5; 2009. PEMEX – Mexico: 10.0; before 2009. Reliance Industries – India: 55.0 – date not specified. Indian Oil Corporation (IOC) – India: 60.0; October 2011. Thailand PPT Aromatics Refining Company – Thailand: 30.0; 2012. South Korea Hunan Petrochemical Company and Qatar International Industrial Holdings Company – 60.0; 2011.

Continuous growth in domestic production capacity: In 2008, China’s styrene production capacity was 3.174 million tons per year, representing a 10.0% increase compared to the previous year. New styrene production facilities included one with a capacity of 80,000 tons per year operated by CNPC’s Daqing branch. This facility used ethylene derived from the dry gas produced by Daqing Petrochemical as raw material, employing China’s own third-generation catalytic process for converting dry gas into ethylbenzene, followed by dehydration to produce styrene. The purity of the resulting styrene reached 99.9%. Another newly commissioned styrene plant is a new production line with an annual capacity of 210,000 tons of styrene, added by Jiangsu Lishide Chemical Co., Ltd. After the commissioning of this new plant, Lishide’s total styrene production capacity reached 420,000 tons per year, placing the company in third place in China. Table 3 shows the statistics of China’s main styrene manufacturers and their production capacities in 2008. 　　Due to the spread of the global financial crisis, styrene prices dropped sharply, forcing many new projects to be postponed or canceled. Singapore’s SP Chemicals Company originally planned to start construction of a 320,000 t/a styrene monomer plant in Taixing, Jiangsu, in the third quarter of 2008, but it now appears that the start date will have to be postponed by at least 2 years. The plans for the construction and expansion of styrene plants in China from 2009 to 2012 are shown in Table 4. Table 3: Major styrene manufacturers in China in 2008 and their production capacities (in 10,000 t/a)
Company Name | Production Capacity | Process Used
--- | --- | ---
CNOOC-Shell joint venture | 56.0 | Shell SM/PO patented technology; ABB/Lummus ethylbenzene technology
Shanghai SECCO Petrochemical | 50.0 | UOP/Lummus technology
Jiangsu Lishide Chemical Co., Ltd. | 42.0 | Lummus/Monsanto technology combined with domestic technology
Sinopec Qilu Petrochemical Branch | 20.0 | Monsanto/Lummus technology; capacity expanded to 200,000 t/a using domestic technology
Changzhou Donghao Chemical Co., Ltd. | 15.0 | Domestic negative-pressure adiabatic technology (developed by Sinopec Shanghai Research Institute); ethylbenzene produced via gas-phase method
CNPC Jilin Petrochemical Branch | 14.0 | UOP/Lummus technology combined with domestic isothermal adiabatic technology
Yangzi BASF Styrene Series Co., Ltd. | 12.0 | UOP/Lummus technology
Sinopec Maoming Petrochemical Branch | 12.0 | UOP/Lummus technology
CNPC Dalian Petrochemical Branch | 10.0 | Domestic negative-pressure adiabatic technology
Sinopec Yanshan Petrochemical Branch | 8.4 | Monsanto/Lummus technology combined with Smart technology
Sinopec Guangzhou Branch | 8.0 | Fina/Badger technology
Hainan Shihua Jiasheng Chemical Co., Ltd. | 8.0 | Catalytic dry gas-based ethylbenzene production technology
CNPC Daqing Petrochemical Complex | 9.0 | Fina/Badger technology
CNPC Jinzhou Petrochemical Company | 8.0 | Domestic negative-pressure adiabatic technology
CNPC Jinxi Refining & Chemical Company | 6.0 | Domestic technology
Liaoning Huajin Chemical (Group) Co., Ltd. | 6.0 | Fina/Badger technology
CNPC Lanzhou Petrochemical Branch | 6.0 | Domestic isothermal adiabatic technology
CNPC Fushun Petrochemical Branch | 6.0 | Domestic negative-pressure adiabatic technology
North China Petroleum Administration Petrochemical Plant | 8.0
Guangdong Zhongshan Nanrong Chemical Co., Ltd. | 5.0
Lanxing Petroleum Daqing Branch | 8.0 | Catalytic dry gas-based ethylbenzene production technology
Total | 317.4

Table 4: Plans for new and expanded styrene production facilities in China from 2009 to 2010 (in 10,000 t/a)
Company Name | Additional Production Capacity | Location of Facility | Remarks
--- | --- | --- | ---
Sinopec Zhenhai Refining & Chemical Co., Ltd. – joint venture with Lyondell | 60 | Ningbo | Construction started on November 6, 2006; completed in 2009. Uses styrene/epichlorohydrin technology.
Changzhou Donghao Chemical Co., Ltd. | 20 | Changzhou | Expansion planned.
Shanghai SECCO Petrochemical | 18 | Shanghai | Set to go into operation in 2009.
Shantou Ocean Company | 40 | Quanzhou, Fujian | Under construction.
Yangzi BASF Styrene Series Company | 18 | Nanjing | Expansion planned.
Taiwan Styrene Monomer Company | 15 | Quanzhou, Fujian | Expansion planned.
Liaoning Huajin Chemical Co., Ltd. | 14 | Liaoning | Set to go into operation in 2009.
Anqing Petrochemical Company | 10 | Anqing | Construction started in November 2007; planned to go into operation in April 2009.
CNPC Daqing Petrochemical Company | 10 | Daqing | Expansion planned.
Qingdao Refining & Chemical Company | 8 | Qingdao | Under construction.
Shanghai Gaqiao Petrochemical Company | 10 | Shanghai | Under construction.
Nanjing Jinling Petrochemical Company | 6 | Nanjing | Under construction.
China Jinsheng Joint Venture Company | 20 | Jinshan, Shanghai | Under construction; Sinopec provides ethylene and benzene as raw materials.
Sinopec Guangzhou Petrochemical Company | 4 | Guangzhou | Expansion planned.
Runda Group Company | 85 | Zhuhai | Under construction.
New Dunshanzi Petrochemical Company | 32 | Xinjiang | Under construction.
Singapore SP Chemical Company | 32 | Taixing | Completion scheduled for 2012.
Changzhou Xinnri Chemical Company | 25 | Changzhou | Completion scheduled for 2009.
Tianjin Bohai Chemical Group | 50 | Tianjin | Construction started in November 2007; set to go into operation in 2009.
Shandong Hengyuan Petrochemical Company | 6 | Under construction.
Total | 483

The impact of the financial crisis led to a sharp decline in demand. In the first half of 2008, both the domestic and international markets for styrene remained on an upward trend. Specifically, the price remained on a steady upward trend from January to March; there were slight fluctuations in the market in April. From May to June, driven by various factors, market prices surged sharply before declining and stabilizing by the end of June. 　　In the first half of the year, crude oil prices soared, driving up the prices of chemical raw materials and resulting in a significant increase in the prices of styrene on the international market. The overall environment in the domestic market was relatively stable in the early stage, with the styrene market showing steady growth ； Later, due to the reconstruction efforts in the earthquake-stricken area of Sichuan, and driven by the increasing demand for EPS and rigid plastics, styrene manufacturers raised prices frequently, causing market prices to soar at one point. At the end of June, as the busy wheat harvesting season approached, some downstream enterprises stopped production or reduced their output. Additionally, demand in certain markets declined due to factors such as power shortages and floods, which led to a stabilization in the price of styrene. 　　In the second half of the year, affected by the global economic slowdown and a sharp decline in market demand, domestic styrene prices continued to plummet. The transaction price dropped from 10,700 yuan per ton on October 6 to 5,000 yuan per ton by early November, reaching its lowest level in 5 years – a drop of half within just one month. In 2008, the import volume of styrene was 2.81 million tons, a decrease of 9.35% on a year-on-year basis. Due to the impact of the financial crisis, import volumes from August to November dropped significantly compared to the same period last year, with declines of 36.0%, 34.1%, 27.7%, and 34.1% respectively, before showing a recovery in December. The monthly statistics of China’s styrene imports from 2007 to 2008 are shown in Figure 1. 　　Since November 2008, all 3 EPS production units at Wuxi Xingda Company have ceased operations, while the operating rates of the other EPS units, as well as the ABS and PS production units, are also only around 50% ； Demand for styrene-butadiene rubber has **decreased**, and the production capacity of some tire manufacturers has been reduced to 50%–60%. To reduce losses, styrene manufacturers were forced to significantly cut market supply; many listed companies issued announcements about suspending or reducing production. The poor performance of the styrene industry reflects the downturn in the global economy. To prevent a sharp economic downturn, the central government has implemented proactive fiscal policies, resulting in numerous favorable measures. The export tax rebate rates for products such as plastic resins have been adjusted; the export tax rebate for plastic finished products (excluding toys) has been increased to 9%, while that for toys has been raised to 14%. However, as signs of a global economic recession have become increasingly evident, these \"positive factors\" are not enough to address immediate problems; it will take time for consumer demand to improve and market confidence to be restored. Market competition is becoming increasingly fierce. In recent years, as the consumption of styrene’s downstream products such as PS and ABS resins in China has continued to rise, the demand for styrene has also increased year by year. In 2007, the apparent consumption of styrene was 5.2 million tons, representing a year-on-year increase of 14.7% ； The import volume was 3.1 million tons, a year-on-year increase of 32.5% ； In 2007, as the new production capacity for styrene in China was only 160,000 tons per year, and this new capacity had not yet begun to generate actual output, the annual styrene production remained roughly the same as in 2006, at 2.1 million tons. 　　China’s styrene production capacity is insufficient to meet the demands of the domestic market, resulting in a large gap in supply; the country’s reliance on imports exceeds 50%. The supply and demand statistics for the phenylethylene market in China from 2003 to 2008 are shown in Table 5. 　　It is estimated that China’s demand for styrene will reach 6.35 million tons in 2010, at which time domestic production capacity will exceed 6 million tons per year. This will lead to a significant reduction in the imbalance between supply and demand, with the two basically reaching equilibrium, which also signals the gradual maturity of the styrene industry and its downstream industries. 　　Currently, about 60% of styrene in our country is used to produce PS and EPS, 17% is used to produce ABS, and 23% is used to produce other products. In recent years, the growth rates of China’s major styrene-based industries, such as PS and EPS, have slowed down, as the rationalization and substitution of end products have led to a reduction in PS consumption. Meanwhile, the rapid growth in demand for ABS resin and styrene-butadiene rubber, along with a significant increase in production capacity, will become new drivers for styrene consumption. In the coming years, the demand for styrene-butadiene latex will grow at a double-digit rate, with an annual growth rate likely to exceed 25% ； The annual demand growth rate for ABS will reach 8.6%. With the significant increase in the production capacity of styrene-butadiene rubber and ABS, the demand for the raw material styrene also continues to rise. It is estimated that in 2010, China’s demand for styrene in styrene-butadiene rubber will reach 250,000 tons, while the demand for styrene in ABS will reach 1 million tons. These two products will become the sectors with the fastest growth in styrene consumption. Although demand for styrene in our country will continue to grow, Chinese styrene manufacturers will face increasing challenges as new production facilities come online in Asia and the Middle East, and foreign styrene production gradually shifts to our country. 　　　　　　　 Table 5 Statistics on the supply and demand of styrene in China from 2003 to 2008, in 10,000 tons per year. Year: Production capacity; Output/10,000 tons; Imports/10,000 tons; Exports/10,000 tons; Apparent consumption/10,000 tons. 2003: 109.5; 94.82; 266.06; 0.61; 360.27. 2004: 130.5; 104.00; 288.90; 0.86; 392.04. 2005: 187.4; 125.0; 281.20; 1.25; 404.95. 2006: 279.4; 218.0; 234.30; 0.59; 451.71. 2007: 287.4; 210.0; 310.15; 0.02; 520.13. 2008: 317.4; —; 281.08; 0.21; —. Last edited by Ma Hai on 2009-2-19 at 20:25. Note: $ # $ $