BUSINESS for the largest use of xylenes extracted from naphtha. Most of the/>-xylene is oxidized into PTA, which is reacted with ethylene glycol to produce polyester. To some extent, polyester demand depends on the availability of cotton because the two fibers are somewhat interchangeable in the clothing industry But on average, CMAI's Witte says, global demand for polyester grows between 6 and 8% annually Most demand growth is taking place in Asia because that's where most clothing is made. JEAN-FRANCOIS TREMBLAY, C&EN HONG KONG "Polyester has been displacing cotton steadily for quite a long time, a trend not both the Institut Francais du Petrole and INCE 1995, THE ASIAN PETROlikely to stop," Witte adds. "Moreover, polyIFP's for-profit subsidiary, Axens. IFP is a chemicals market has been ester is a significant packaging material used nonprofit research and training institute tough, and for the past three in water and other beverage containers. In focusing on technologies used in oil and years, it has been truly horrible. the U.S., its use in these applications now gas exploration, refining, processing, and Most products are in oversupply, exceeds that of fiber." storage. affecting pricing and profit margins. Plants On the supply side, the picture is more have been idled, and some companies have About recent market forecasts, Concomplex. Danley B.Wolfe, a principal with sold assets just to raise some cash. Pro- vers says: "The strategists try to predict aromatics industry expertise at the Chem ducers are desperately hoping for demand when there will be a turnaround that would Systems unit of Nexant in Houston, notes to catch up with supply so that prices can justify investment in xylene units. This is that there are several ways to obtain/?-xyrise. very interesting for us—people who sell lene. Operating decisions, he says, In the aromatics business, it is are ultimately linked to gasoline still easier to find bears than bulls, SLUGGISH prices. W h e n ^-xylene prices are but some observers are turning opAsian p-xylene prices have been in the dumps too low, refiners do not extract it timistic. "In basic aromatic feedsince their mid-1990s runup and other xylenes from heavy stock, Asia is growing short," says naphtha or reformate. Rather, the David H. Witte, business director > per metric ton xylenes remain in the gasoline pool of global fibers and feedstocks at 2,000 to be sold as high-octane blending Chemical Market Associates Inc. components. (CMAI) in Singapore. "That does not mean that the world is growing Technology can further affect the short. But Asia is." supply ofj&-xylene. Basic catalytic re-forming of heavy naphtha proWitte sees the rebound beginvides a mixture containing roughly ning to show this year and taking 10% benzene, 55% toluene, and hold in 2003. "It's a rebound that 35% xylenes. But depending on CMAI has been expecting since NOTE: Quarterly spot prices in the Asia-Pacific region. SOURCE: Chem Systems market conditions, toluene can be 1997," he points out. On the dedisproportionated into mixed xymand side, the main reason is that lenes and benzene. Recent process imwithin the next year, about 3 million mettechnologies. But in fact, we don't really provements can boost the ^-xylene yield ric tons per year of purified terephthalic know" of this process to over 90%, Wolfe reports, acid capacity is coming onstream in Asia. With little enthusiasm, he adds, "We but it has not been economically justified Although operating rates for PTA are exhear 2003, there should be a turnaround to do so recently pected to fall as new capacity comes onin 2003." In the meantime, though, so few line, there will still be significant growth in How much/>-xylene and other xylene companies are interested in building/>-xydemand for^-xylene, Witte says. isomers can be made available to the marlene plants in Asia that IFP may close the ket, Wolfe says, exceeds what appears to be ^-Xylene is the main feedstock for PTA, Singapore office, Convers says. currently available. "There is a large surbut only three newj^-xylene plants, with a plus for global capacity of/nxylene, most of combined capacity of 1 million metric IT'S NOT EASY to predict the aromatics it integrated to refineries. Mixed xylenes tons, will begin operations in Asia this year business. But even a slight possibility that are globally traded commodities for chemand next. Furthermore, in the coming /^-xylene could be short gets marketers exical use and have alternative use as an ocmonths, maintenance work at oil refinercited. When supply was tight in 1995,j&-xytane component for gasoline," he says. "I ies in Japan will tighten the supply of lene prices occasionally exceeded $1,000 don't agree that there is a pending shortmixed xylenes, says Kiyofuni Asada,^-xyper metric ton and even briefly approached age of mixed xylenes since, like naphtha, at lene marketing manager at Nippon Mit$2,000. Current spot prices are slightly the right price the material will become subishi Oil. over $300. available and be traded globally to fill the Imminent tightness in the market for The availability of/>-xylene is deteraromatics has been erroneously predicted mined by a multitude of factors. In the xygap-" several times in the past fewyears, observes lene chain, the main driver for demand is Witte agrees that there is enough xypolyester. This is because/nxylene accounts lene worldwide to supply the new PTA Alain Convers, Singapore-based director of A S I A - P A C I F I C
RUMBLINGS OF AN AROMATICS UPTURN Some market watchers are turning optimistic about the region's/>-xylene market
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BUSINESS units. "There is plenty of it—it is just in the wrong spot," he says. Shipping ^-xylene from the U.S. to Asia can add 10 to 20% to its cost, he observes. Tightness in the Asian/>-xylene market would come as excellent news for Trans-Pacific Petrochemical Indotama (TPPI), a stalled venture aiming to build olefin and aromatics facilities in East Java, Indonesia. Construction of the project was halted during the Asian financial crisis in 1998. The company is now lining up new financing and new shareholders to resume construction of the aromatics unit, which is 60% completed. MihirTaparia,TPPrs finance director, says freight charges that add to the cost of imported /^-xylene will give TPPI a decisive competitive edge in supplying aromatics in Indonesia. There are several PTA units operating in Indonesia, but most of the/>-xylene has to be imported.
In the 1990s, numerous new/>-xylene plants were built in Asia, but the economic crisis of 1997 led to a sharp slowdown that caused some units to be idled. For example, Witte says ExxonMobil's subsidiary, Singapore Aromatics, no longer produces /^-xylene for PTA customers because of overbuilding in the region in the late 1990s. At present, however, there are almost no new />-xylene units to feed into the 3 million metric tons of PTA capacity that is scheduled to come onstream in Asia. In the past few years, because of the poor financial performance of existing/nxylene units, planners at petrochemical firms have been unable to convince upper management of a need for new ones, Witte says. Later this year LG-Caltex will complete construction of a 350,000-metric-ton-peryear ^-xylene unit in South Korea. Much of the output will supply a PTA expansion by
"In basic aromatic feedstock, Asia is growing short. That does not mean that the world is growing short. But Asia is."
I n n o v a t i o n C a t a l y z e d by
San Nam, a venture owned 4 0 % by Mitsubishi Chemical, 4 0 % by Samyang, and 20% by LG-Caltex. PTA capacity is being expanded by 400,000 metric tons per year to reach 1.5 million metric tons per year at the site in 2003. Production began in January at Thai Paraxylene, a 290,000-metric-ton-per-year /^-xylene unit in Thailand that is one-third owned by Nippon Mitsubishi Oil. The only other significant addition in the next two years is at Zhenhai Refining & Chemical in Ningbo, China, where a 450,000-metricton-per-year plant is due on-line in 2003. Beyond then, it's not clear which new units will become operational. The jury is out as to whether profit margins are about to improve in the/>-xylene market. But at CMAI, Witte is firmly committed to his prognosis: 'Assuming that world economic conditions do not dramatically deteriorate, the Asian market as a whole is getting shorter of basic aromatic molecules this year—and as you go out into the future—because of a lack of fundamental building in the aromatic reforming operation." If so, that's excellent news for long-suffering producers. •
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