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Asian Petrochemical Feedstocks

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Presentation on theme: "Asian Petrochemical Feedstocks"— Presentation transcript:

1 Asian Petrochemical Feedstocks

2 Scope of the Study To study the market demand and supply scenario (current and next twenty years) for the following petrochemical feedstocks and solvents in Indian, Asia Pacific and Asian Region Ethylene Propylene (both chemical and polymer grade) Benzene, Toluene and Xylene Isobutylene Butene-2 LAB feedstock Hexane Naphthalene Coke

3 Methodology Primary and Secondary Survey
Past Trend Analysis to build a demand forecasting model

4 Presentation Outline Industry Overview Demand Determinants
Ethylene, Propylene, BTX, Butylenes, LAB Feedstock, Hexane, Naphthalene, Coke Demand Determinants Asian Demand Projections Indian Demand Projections

5 Overview

6 Ethylene: where used?

7 Ethylene: Consumption Pattern

8 Feedstock Usage Japan: Naphtha Based Korea: Naphtha Based
Taiwan: Naphtha Based ASEAN: Gas/Naphtha Based China: Naphtha/Gas oil Based India: Gas/Naphtha Based Middle East: Mainly Gas Based Middle East highly competitive on account of cheap gas. Other countries gas cost is relatively high. Naphtha based crackers have profitability pressures whenever crude prices harden

9 Asian Ethylene Consumption

10 Ethylene Capacity Buildup in Asia

11 Large Unfulfilled Demand in China
Elsewhere in Asia, surplus in derivative capacity, and exports are mainly to China

12 Petrochemicals

13 Petrochemical Cyclicality

14 Middle East Cost Competitiveness

15 India Ethylene Key Issues
Slowdown in domestic demand post commissioning of crackers Earlier there were Supply constraints, supply constrained demand got satisfied In India, high level of recycling, So demand is even more price linked Plastic processing industry uncompetitive and facing competitive pressures both in exports market and domestic. States of western India consume bulk of ethylene largely because of significant processing capacity in that location After commissioning of HPL and GAIL crackers, the capacity for plastic processing has increased in the northern and eastern India.

16 Indian Ethylene Demand

17 Indian Demand Capacity Trends

18 Statewise Ethylene Demand
Based on location of plastic processing and textile industry and estimated consumption of ethylene in those industries.

19 Regionwise Demand and Share in GDP
Imbalance on account of large capacity of plastic processing and textile in Western India. Significant amount of finished plastic and textile products exported to other regions.

20 Propylene: How Produced?
Co produced with ethylene in a steam cracker. Negligible for ethane based cracker, higher for propane and for naphtha based cracker, nearly 50% of ethylene production Co produced with gasoline. Yield in a typical FCC unit 2-4%, In two high olefinic modes, propylene yield can be 10% (as in Reliance) and 20% (deep catalytic cracking as in one of Thailand units and some plants in China) Propane Dehydrogenation. Highly Capital intensive, Can be a good source with cheap propane which can be available from countries with high quantites of wet natural gas Metathesis. Low Capital Intensity. Uses ethylene and butylene-2 as raw material. Can be effective if ethylene prices are low. Methanol to olefins: Moderately capital intensive. Requires cheaply available methanol

21 Propylene: How Consumed?

22 Asian Propylene Demand Supply

23 Key Asian Propylene Producers

24 Asian Propylene Production

25 Asian Chemical Grade Enduse Consumption

26 Polymer Grade

27 China Polymer Grade

28 China Chemical Grade

29 Ethylene to Propylene Prices
Fast demand growth for polypropylene More importantly, little co product production in Middle East gas based crackers So, profitability for naphtha based crackers higher in propylene

30 Propylene Production

31 Indian Demand

32 Chemical Grade Demand Supply

33 Chemical Grade Derivative Demand

34 Regionwise Propylene Demand

35 Benzene: Where Used?

36 Paraxylene: Where used?
PX used to produce both PTA and DMT PX demand derived from polyester Polyester used in textiles as fibres; in plastics (PET bottles), films (various uses) and other products. Largest use is in fibres, PET bottles hold significant demand in the developed country PX more important than Benzene in Asia primarily because of large textile industry in Asia

37 Other BTX Orthoxylene primarily used in production of pthalic anhydride Toluene used in tolylene di isocyanate, solvents and various chemicals

38 Asian BTX Capacity

39 Paraxylene

40 Benzene

41 BTX Prices


43 Indian Benzene Supply/Consumption
While some production is being exported, there are significant derivative imports

44 Indian Benzene Derivative Demand

45 Paraxylene

46 Statewise BTX Demand

47 C4 Utilisation

48 IsoButylenes: Where used?

49 Isobutene: Technology Driven End Products
Technology for butyl rubber available with few and not easily shared High Purity Polyisobutylene technology also difficult MMA technology from isobutylene also difficult + risk of new technology getting developed

50 Large Production of Isobutene compared to non-fuel use
As against a net chemical demand of less than 1 million tonne, Asian isobutylene capacity was estimated to be higher than 5 million tonnes in 2003. A significant portion of the isobutylene production in Asia is converted to Methyl Tertiary Butyl Ether (a high octane gasoline blending component). Further, it can directly be blended with either gasoline or LPG.

51 Butyl Rubber-Largest Chemical Use
Used in tubes and tubeless tyres Butyl rubber  estimated demand for isobutylene is close to 0.33 mn tonne in Asian region. Only two capacities in Asia. One owned by Japan Butyl rubber and second by Sinopec Beijing Yanhua. A bulk of this demand is actually met by imports from Canada and Russia. With rising production of tubes and tubeless tyres in the region, the demand for butyl rubber has increased significantly.

52 Asian Butyl Rubber Consumption

53 Indian Isobutylene Demand Supply
Bulk of production for fuel blending purposes Entire butyl rubber and high purity polyisobutylene imported. Co polyisobutylene/chemicals produced in India.

54 Butene- 2 Where used? No significant chemical use of pure butene -2
n butenes (butene 1 + butene 2) are used to produce sec butyl alcohol used to produce methyl ethyl ketone

55 Asian Methyl Ethyl Ketone Cnsumption
Metathesis units yet to start on commercial scale in Asia

56 Asian n Paraffin Consumption

57 N Paraffin Consumption Trends

58 N Paraffins: Where used?
The predominant use of n paraffins is in manufacture of linear alkyl benzene. More than 85% of n paraffins worldwide are used for production of linear alkyl benzene. The other uses of n paraffins include production of High grade alcohol, chlorinated paraffin, nitro-alkanes and amines, Sulphoxidation or sulphochlorination for surfactant or plasticiser manufacture, Raw material for microbiological oxidation or fermentation process and direct use as a solvent in many applications.

59 N paraffin Prices The prices of n paraffin are dependent on the prices of kerosene, which, in turn, are dependent on the prices of crude oil. With the return stream of n paraffin extraction plant (about 80% of original stream) being thus valued at much lower value, the prices of n paraffin would be equal to differential between two kerosene streams applied to n paraffin plus the cost of volume of n paraffins plus other costs and are thus, significantly higher than the prices of kerosene (differentials are around US$ per MT). Over the last ten years, there has been an increase in merchant sales of n-paraffins to new LAB plants in the developing world. At the same time, supplies of traditional feedstocks that are rich in n-paraffin have declined. The production of normal paraffins is influenced by the availability of n-paraffin-rich kerosene at the n-paraffin producing facilities. This has been in relatively short supply, compared to previous years, contributing to the tight market situation and high prices of n paraffins. New Fischer-Tropsch units designed to meet the growing demand for low-sulfur fuels are expected to provide new supplies of coproduct paraffins, possibly in large quantities, bringing much respite for standalone producer.

60 Hexane Key Issues 90% of demand arises from edible oil sector wherein its low cost and high level of usefulness lead to its domination Out of total solvent demand, edible oil extraction is about 2% of the demand in a mature market. Health concerns over Hexane on account of its established linkage with inducing neuropathy if consumed in significant quantities. On a health hazard spectrum of n-Hexane registers Most exposure cases reported at worksites and related to inhalation

61 Solvent Extraction

62 Indian Hexane Consumption

63 Why is consumption declining?
Oilseeds availability in India is uncertain and inadequate Therefore, Crude edible oil getting increasingly imported in India to meet growing demand Edible oil extractors have been inefficient in using hexane as solvent and with improving efficiency levels, their per unit hexane consumption has been declining On an average, extractors in the US& EU consume less than 20% of Indian per unit hexane consumption in edible oil sector

64 Statewise Demand Statewise Demand

65 Asian Hexane Demand Supply
Asian production of hexane assuming a 5% of gasoline as hexane production would be close to 7.5 million tonne Required extraction for edible oil sector is only around 0.6 million tonnes. Extraction capacities in India, China, Malaysia, Indonesia

66 Naphthalene Can be produced from Met-coke/Refineries Used in manufacture of PAN; Construction; Textiles Asian region – Potential Supply position is over 5 times the demand. Major deterrent for capacity addition. Naphthalene content in crude around 0.5 to 2% so a 10 million tonne refinery would have 100,000 tonne production

67 Naphthalene

68 Asian Naphthalene production from coal

69 Statewise Naphthalene Demand (0.35 million tonnes)

70 Coke Two major grades – Calcined and non-calcined
Calcined coke commands price premium Power Generation, Cement, Aluminium – major industries Strong volatility in product demand Japan – Leading consumer India, China – Surplus situation

71 Asian Petcoke Capacity

72 Demand Determinants

73 Ethylene Projections: Demand Determinants

74 Propylene (chemical grade) Projections: Demand Determinants

75 Propylene (polymer grade) Projections: Demand Determinants

76 BTX Projections: Demand Determinants

77 Iso Butylene: Demand Determinants

78 Cis / Trans Butene 2: Demand Determinants

79 LAB Feedstock: Demand Determinants

80 Hexane: Demand Determinants
Hexane consumption linked to growth in edible oil extraction through solvent extraction processes With import of edible oil, this may not be linked to GDP growth Also, efficiency of solvent extraction process in India and other Asian countries is on the rise on account of inefficient facilities.

81 Naphthalene: Demand Determinants

82 Coke: Demand Determinants

83 Polymer Industry linked to GDP Growth

84 Per Capita Income Vs Polymer Consumption

85 Plastic Processing Industry Exports

86 SSI Reservation limits Indian Downstream Plastic Processing Sector

87 Textile Industry linked to GDP Growth
Industry Overview Textile Industry linked to GDP Growth

88 Agreement on Textile & Clothing
Agreement on Textile and Clothing has given way to application of WTO framework on international textile trade For the first time in last four decades, free textile trade to take place Increase in export market for developing countries as also increase in competition Although China, can expand its share at the cost of others single handedly, however, developed world unlikely to have single supplier. In addition, China joined WTO late and so developed countries have an option of imposing restrictions of Chinese growth

89 Asia Becoming a Manufacturing Base to Supply to World

90 PPP Per Capita GDP 1993

91 PPP Per capita GDP 2003

92 Rising Economic Development in China, Increasing Development in China in comparison to other Countries

93 China Export Led Growth

94 High Exports in Labour Intensive Industries

95 Feedstock Situation Middle East has large gas reserves
Oil demand set to rise on account of increasing development Oil trade likely to increase as more demand increases in India and China wherein crude production not increasing sufficiently. FSU/Middle East to be the main suppliers to meet increase in demand Middle East needs to increase oil capacity in case it plans to meet this demand. In past, whenever, Middle East capacity utilisation has been high, prices have gone high. However, even availability of reserves in Middle East is an issue. Saudi Arabia not able to increase production. Reserves not updated. Oil prices and consequently naphtha prices to remain high.

96 Further Increase in Middle East Capacity

97 China Vs India Petrochem

98 Asian Demand Projections

99 Asian Ethylene

100 Asian Ethylene

101 Asian Propylene (chemical grade)

102 Asian Chemical Grade Propylene

103 Asian Propylene (polymer grade)

104 Asian Benzene

105 Asian Benzene

106 Asian Paraxylene

107 Asian Paraxylene

108 Asian BTX

109 Asian Isobutylene

110 Asian Isobutylene

111 Asian Iso Butylene from MMA

112 Asian N Butene Demand from MEK

113 Asian Butene -2 Demand from Metathesis

114 Asian LAB Feedstock

115 Asian Hexane

116 Asian Naphthalene

117 Asian Coke

118 India: Demand Projections

119 India: Ethylene

120 India: Propylene Chemical Grade

121 India: Propylene

122 India: Benzene

123 India: Paraxylene

124 India: BTX

125 Indian Isobutylene

126 India: n Butene

127 India: Hexane

128 India: N paraffins

129 India Naphthalene

130 India: Coke

131 Statewise GDP Growth

132 Statewise Demand 2023 Statewise Demand based on GDP growth

133 India: Critical Issues
When would SSI dereservation take place? How India competes in international textile post WTO accession?

134 Summary/Conclusions

135 Summary/Conclusions

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