I ndustry / Business
Propylene solidifies position as feedstock Availability plus price
propylene as an increasingly important raw material for chemicals and plastics. Most of these unknowns stem from possible government actions regarding use of hydrocarbon fuels in this country. These actions could affect propylene in many ways, mostly to influence costs, which, in turn, could weigh heavily on its availability for making chemicals. About half of all propylene produced in the U.S. is used in gasoline as an alkylate that combines isobutane and propylene. And chemical users of propylene depend on refinery operations for about half of their supplies. The volume of propylene produced in refineries far exceeds the volume produced as a coproduct of ethylene in steam crackers, mostly from liquefied natural gas. One of the imponderables is the use of lead alkyls in gasoline. If government regulations eventually prevent their use in gasoline, propylene alkylate will need to be supplemented with aromatics to give most gasolines a sufficiently high octane value. However, such use of aromatics will either increase or decrease propylene alkylate use, depending on the relative prices of the alkylate and the aromatics. The uncertainties along with more solid prospects for propylene and its derivatives will be covered in detail during several meetings to be held in Houston and San Antonio beginning this week and through the end of the month. At the Gas Processors Association meeting, attendees will discuss outside the formal sessions one of their key problems—prospects for more light hydrocarbon feedstocks from natural gas for use in making olefins. Concern for propylene availability is
also evident in programs for meetings of the Society of Plastics Engineers this week and the American Institute of lower than ethylene's makes Chemical Engineers next week. Then, during the last week of the month in propylene attractive to San Antonio at the National Petroleum Refiners Association annual meeting, chemical makers in spite many deals for sales of propylene deof some uncertainties rivatives may be put together as brokers from both the U.S. and abroad gather to meet informally with officials of oil and chemical companies. Use of propylene in chemicals and Although most of the meeting atplastics may be down this year for the tendees are well aware that propylene first annual decline in more than two had a spot price on the Gulf Coast of decades. Consumption likely will reach as little as 5 cents a lb at the beginning about 10.7 billion lb, about the same as of March, few are looking at such a in 1973 and down almost 5% from the price in current dollars over the long estimated 11.2 billion lb used last year. term. Of course, all bets would be off if And this decline will follow a year of a radical decline in worldwide crude oil less-than-average growth last year. prices resulted from breakup of the OrHowever, it seems likely that this ganization of Petroleum Exporting downturn will be a transitory one. The Countries. But, currently, most people outlook for propylene as a chemical concerned with making chemicals from feedstock appears generally bright. For hydrocarbons expect only increasing instance: raw material costs leading to higher • Chemical consumption of propylselling prices for their products. As ene is expected to pick up quite sharpthings stand, future contract prices for ly by fall, led by an upsurge for polychemical-grade propylene probably will propylene. This overall improvement range upward from 8 cents a lb in 1974 will build up enough momentum by dollars. the end of the year to assure a good year in 1976. Polypropylene likely will be the first • Propylene supply will meet demajor propylene derivative to recover mand comfortably in 1975. This is in from the record economic decline that marked contrast with the extreme has hit most industries in the fourth tightness of a year ago. quarter of 1974 and the first quarter of • The propylene supply situation 1975. The other major propylene delooks quite good for the longer term. rivatives—acrylonitrile, cumene, isopro• Users of propylene can expect its pyl alcohol, oxo alcohols, and the oliprice to run about 2 cents per lb below gomers—will fare less well. For most of that of ethylene. In recent times, this these derivatives, 1975 production will differential has been much smaller, do well if it reaches 1974 levels. For typically about 0.2 cent per lb. some, the decline could be as large as However, there are some uncertain10%. ties in this generally solid outlook for Polypropylene production could post a small gain in 1975, although much of Propylene tower is being added at Gulf Oil Chemicals' Cedar Bayou, Tex., plant the extra output may go into increasing inventories. Still, polypropylene could benefit more than other propylene derivatives from the significant and growing cost advantage of propylene over other olefins, particularly ethylene. Much of the benefit could come from polypropylene's wider consumer use in fabricated items such as packaging and semidisposables such as toys. Polypropylene production in the U.S. turned down rapidly in November and December last year as producers reeled under the impact of large increases in the ratio of inventory to sales. Oil company officials who follow propylene demand tend to agree with Hercules officials who find a slowing in the decline for polypropylene beginning in Janu-
ary. They look for production in the first quarter to be down drastically but with strong hints of recovery. Assuming a business upturn during the summer, demand for polypropylene could just as rapidly reverse the downturn and rise enough to give the forecast gain for 1975. The momentum easily will carry over into 1976 to give a good gain for that year. Cumene (isopropyl benzene) is another propylene derivative that could surprise market forecasters during 1975. Cumene production was limited in 1974, first by the high price and the shortage of benzene and later by a sudden drop in phenol demand. Practically all cumene made by alkylation of benzene with propylene goes to make phenol and coproduct acetone. If housing construction picks up from its present doldrums, and if consumption of plywood and, in turn, phenolic adhesives for plywood do the same, cumene could post a reasonably good production year. There are already some signs of a firming of demand for phenolic resins for plywood adhesives. Cumene, prior to 1970, showed large gains in annual production as it captured a growing share of the raw material market for phenol. Now, except for production by Dow Chemical using the chlorobenzene route and small quantities by some other producers, all phenol comes from cumene. After Dow shifts completely over to cumene for phenol, demand for cumene will depend on phenol demand unless the small nonphenol uses—for instance, as a solvent or for making a:-methyl styrene—boom. Propylene oxide will continue to be a
Propylene use in making chemicals and plastics . .
growing use of propylene spurred by use of the polypropylene glycol in urethanes. Demand for urethanes has become cyclical because of ups and downs in housing, automobiles, and appliances. These variations are dampened by the time the product chain gets back to propylene with the result that this use of propylene can have a relatively smooth growth curve. Although urethanes take more than half of propylene oxide production, nearly a third goes to propylene glycol used in unsaturated polyester resins, frequently in place of glycerine. Other uses of propylene glycol include plasticizers or additives in tobacco humectants, cosmetics, and brake fluids. Most of these uses are expected to help growth in propylene oxide demand, but not spectacularly. The most steadily declining use of propylene is in making nonene and dodecene. These oligomers are alkylated with benzene to produce surfactants. Because of increasing use of biodegradable detergents, demand for alkylated benzene surfactants in the U.S. has declined rapidly. Exports held up well for a while, but now are slackening as propylene trimer and tetramer are being made outside the U.S. for detergent. Acrylonitrile is another propylene derivative that appears to be slipping. Demand for propylene to make acrylonitrile dropped 15% in 1974 and likely will drop a little more this year. Acrylonitrile producers have been staggered by cutbacks in demand for the material in fiber uses, largely because acrylic fibers are considered "premium" quality and are used in making more expensive garments.
Recovery in demand for acrylonitrile probably will start later in 1975, but it will be slow. Even with a relatively good 1976, most forecasters doubt if acrylonitrile use of propylene will top 1973 use of about 1.9 billion lb until 1977 or later. This current mixed pattern of demand for propylene and the spot price of 5 cents a lb on the Gulf Coast suggest a plentiful supply now and for the next several years. The supply now is more than adequate for chemicals, reflecting in part a smaller demand for gasoline than had been forecast two or more years ago when new propylene production projects were begun. However, the picture could change quickly if demand for chemicals, plastics, and gasoline were to increase rapidly over a few months. Both steam crackers and catalytic cracking units have some flexibility in producing propylene. This depends on feedstocks and operating conditions. For example, less severe operation of steam crackers tends to increase propylene production at the expense of ethylene. However, the range of this flexibility is limited particularly for units fed heavier hydrocarbons, which are relatively deficient in hydrogen. High severity in these cases, for example, leads to uneconomically high coke production. Steam crackers continue to gain a larger share of propylene production. In 1975 they will account for about 28% of propylene, up slightly from 1974. Because of several new steam crackers scheduled on stream this year and next, the share will top 30% in 1976. New olefin units of Arco Chemical,
. . . has changed its pattern mainly in three areas
a
Billions of lb 13
% of use for derivatives 100 * ,
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80
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Isopropyl alcohol
11
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60
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Oligomers
10 40
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Other*
9
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20
8
0 1970
71
72
73
74
75
76
a Use of propylene for making other compounds is changing very little as percentage of total derivative use. In 1974, 14.3% of propylene going into derivatives
1970
71
72
73
74
75
76
was used for propylene oxide, 14.2% for acrylonitrile, 10.7% for cumene. 8 . 1 % for oxo alcohols, and 8% for other compounds. Source: DeWitt & Co.
'
March 10, 1975 C&EN
9
Gulf Oil Chemicals, and Shell Chemical due in 1976, plus units of Amoco Chemicals and Mobil Chemical just getting started now, will add some 2.2 billion lb annually to propylene capacity. Almost all propylene produced in steam crackers goes to chemical derivatives. In contrast, propylene made in refineries mostly ends up in gasoline. In 1975 about 5.7 billion lb of propylene will be made by steam cracking for chemicals and plastics uses. This production means that propylene output will be well over 70% of propylene capacity from steam cracking. The other 5 billion lb of propylene for chemicals and plastics will come from refineries. Capacity to make propylene in refineries at the beginning of 1975 was about 23 billion lb, according to Patrick E. Baggett of DeWitt & Co., a consulting firm based in Houston. Actual refinery output of propylene for uses other than for energy in the refinery likely will not exceed 17 billion lb. The 12 billion lb of refinery propylene not used to make chemicals and plastics will go mostly into alkylate. It is not economical to purify all propylene produced in refineries sufficiently for use in making other products. Propylene concentration in the product streams from catalytic cracking can be less than 3%. Fractionation of the light hydrocarbons products stream to a propane-propylene cut gets out a large share of the propylene, but
Late 1974 brought sudden drop in output of derivatives making up most of propylene use
Note: First three quarters are three-month averages. Source·: International Trade Commission, Society of the Plastics Industry, C&EN calculations
10
depending on economics, as much as 20% of the propylene is burned as fuel in the refinery. A cut containing 30 to 70% propylene is used to make such derivatives as cumene, isopropanol, and the oligomers. Further purification gives chemical-grade propylene (90% plus) for use in making other chemical derivatives. Polymer grade, usually 99%-plus propylene and without detectable sulfur, is needed for polypropylene and ethylene-propylene-diene rubbers. It costs about 1 cent a lb more than chemical grade to make. Propylene alkylate weighs heavily in the refinery price of propylene. The value of alkylate, in turn, depends on several factors such as cost of isobutane, octane requirements of finished gasoline, and cost of other gasoline ingredients. The influence of lead alkyls on the value of propylene alkylate to refiners has been reduced somewhat. Propylene alkylate has good lead susceptibility—that is, relatively small amounts of lead alkyls raise the octane value much more than the same amount of lead alkyl will raise the octane value of other less sensitive hydrocarbons used in gasoline. Isobutane cost probably has more effect on use of propylene in gasoline than does use of lead alkyls. If isobutane becomes relatively expensive, refiners will look to decreased alkylate and increased aromatics as the source of needed octane values. In this situa-
Monthly production rate, millions of lb
Monthly production rate, millions of lb
150 Acrylonitriie
3501
125
300
100
250
75
200
50
150
J ol
0
Monthly production rate, millions of lb
Monthly production rate, millions of lb
200
225 Polypropylene
Isopropanol
tion, refiners would then value propylene less, in effect let more go to chemicals at lower prices. The interplay of prices—including transfer prices for intracompany sales —will vary propylene production and demand relative to ethylene production and demand. Obviously, if ethylene prices rise more rapidly than do propylene prices, operators of steam crackers will have added incentive to increase ethylene production at the expense of propylene. (In some places, notably in Japan, propylene may be recycled as a feedstock in steam crackers to increase total ethylene yields.) At the same time, of course, if ethylene costs should rise much more than propylene costs, ethylene derivative prices would also tend to rise at least at the same rate. The result would be an incentive to substitute propylene derivatives where possible for ethylene derivatives, tending to restore the balance. This ethylene-propylene price interplay typifies the demand picture for propylene—full of many variables interdependent on each other and on some outside variables not easily recognized at first glance. The variables may dampen or accelerate propylene's future growth rates. They will not, however, have as much influence on propylene's future in chemicals as will the overall and continued growth in demand for propylene-based chemical products. •
170
160
175
160
140
150
150
120
125
140
0
0
C&EN March 10, 1975
4 Qtr
1 Qtr
2 Qtr 3 Qtr 1974
2 Qtr 3 Qtr 1974
4 Qtr
Propylene oxide
200
2 Qtr 3 Qtr 1974
1 Qtr
Monthly production rate, millions of lb 180
180
1 Qtr
Cumene
4 Qt
J ol
1 Qtr
2 Qtr 3 Qtr 1974
4 Qtr
