Benzole Export Increases rapidly

By Zhang Zhantong

Output increase

The production and the market of benzole as a byproduct of coke
are closely related to the development of the coke sector.
According to statistics, the total output of coke in China was
139 million tons in 2003 and reached 177 million tons in 2004,
an increase of 27.3% over 2003. The total output was around 233
million tons in 2005, an increase of 31.6% over 2004. The drastic
output increase of coke has provided reliable conditions for the
development of the benzole production.
    Due to the difference in the scale of coking plants and the
technical level of chemical recovery units, the yield of benzole
in the coking process is different. According to statistics, the
output of benzole in China was 760 thousand tons in 2003, 960
thousand tons in 2004 and 1.23 million tons in 2005. The growth
of the benzole output in 2004 and 2005 was more than 26%,
synchronous to the growth in the coke production. The output of
benzole is mainly contributed by large coking plants with an
annual coke output of over 1.0 million tons. With the completion
of large coking plants and the increase of the benzole yield and
the benzole recovery rate in the coking sector, the output of
benzole is expected to reach around 1.45 million tons in 2006,
an increase of 17.9% over 2005.

Consumption growth

As benzole is a mixture of benzene series products, it can not
be used alone and in-depth processing has to be made before the
final consumption by clients. It is because of this feature that
the market of benzole is mainly in downstream refined benzene
plants. Only small amounts are sold to solvent and pesticide
producers. Plants conducting in-depth processing of benzole
into pure benzene are roughly classified into two categories.
Some companies use the acid wash process to produce pure benzene.
Others use the benzene hydrogenation process to produce pure
benzene. The acid wash process has small investment, quick
return and convenient construction. Most of refined benzene
units in China use this production process. The purity of benzene
produced through the acid wash process is however low and
toluene/xylene can not be effectively separated. The benzene
hydrogenation process has large investment and long
construction cycle, but the production technology is advanced,
the purity of benzene is high, the property of benzene is
basically identical to petroleum benzene and toluene/xylene can
also be effectively separated. The benzene hydrogenation
process therefore represents the development orientation of
benzole processing and refining.
   The capacity of pure benzene with the acid wash process is
885 thousand t/a in China today. Due to unsmooth sales channels,
however, the operating rate in production units is not high. Most
producers fix production on the basis of sales and the average
operating rate is less than 60%. The operating rate in producers
located in Shanxi, in particular, is less than 50%. The output
of pure benzene produced through the acid wash process was 550
thousand tons in 2005, consuming around 700 thousand tons of
benzole. China Shenma Group Co., Ltd., Baosteel Chemical Co.,
Ltd. and Shijiazhuang Coking Group are typical enterprises
producing pure benzene through the hydrogenation of benzole. The
consumption of benzole in benzene hydrogenation process in China
was 250 thousand tons in 2005. With the completion of new
projects, the consumption of benzole is expected to reach around
350 thousand tons in 2006.

Export increase

   The constant oil price rise in the international market in
recent years has led to a widening difference in raw material
cost between petroleum benzene produced with oil as feedstock
and coking pure benzene produced through the benzene
hydrogenation process. The production cost of coking pure
benzene produced through the benzene hydrogenation process is
at least RMB1 500 per ton lower than that of petroleum benzene.
Fat profits have attracted a universal attention to benzole
resources. Foreign companies started to be interested in benzole
resources in China in 2004. The export of benzole in China has
therefore increased constantly. The export amount reached 65.7
thousand tons in 2005, an increase of 36.9% over 2004.

Large-scale production

Small units producing refined benzene through the in-depth
processing of benzole in China mostly use the acid wash process.
They are not only unable to achieve the effective separation of
different chemical products and reach the effluent discharge
standard, but also have poor product quality, high production
cost, low selling price and weak competitive edge compared with
large refined benzene units. Large refined benzene units use the
benzene hydrogenation process with low energy consumption, low
cost, good product quality, high selling price and strong
competitive edge and therefore represent the development
orientation of benzole in-depth processing. Coking enterprises
or chemical enterprises with considerable strength are all
trying to construct large refined benzene units. For example,
China Shenma Group Co., Ltd., Baosteel Chemical Co., Ltd.,
Shijiazhuang Coking Group and Taiyuan Chemical Group Co., Ltd.
are constructing or planning to construct large refined benzene
units with a capacity of over 100 thousand t/a based on the
in-depth processing of benzole. With the completion of these
units, the in-depth processing of benzole will be contributed
by large and advanced enterprises and small refined benzene
units using the acid wash process will be gradually eliminated.

Sustained high price

The price of benzole is mainly influenced by the following 3
factors. (1) Coal price: The price rise of coal will increase
the production cost of benzole and promote its price rise.
Conversely, the price drop of coal will reduce the production
cost of benzole and cause its price drop. (2) Market demand: When
the downstream chemical market is at the rising stage, the demand
of benzole will increase and there will be a price rise.
Similarly, when the downstream chemical market is at the
declining stage, the demand of benzole will come down and there
will be a price drop. (3) Petroleum pure benzene price: Petroleum
pure benzene holds a leading position in China. The market price
of benzole has always followed the price trend of petroleum
benzene over the years. Even if benzole has a different price
trend, it is only a temporary behavior and can not last long.
   As the price of coal was always at a high level in 2005, the
price of benzole was maintained at more than RMB3 000 per ton.
The price of coking pure benzene changes with the price trend
of petroleum benzene. In case the supply and the demand are
basically balanced, the price of benzole also follows the price
trend of petroleum benzene. The price of benzole fluctuated
within RMB3 000 - 5 500 per ton in the first half of 2005 and
RMB3 000 - 4 500 per ton in the second half of 2005. With the
growth slowdown of the economy in the second half of 2005, the
price fluctuation of benzole was weakened.
   The rectification to the safety of small coal mines will be
carried out further in 2006 and the price of coal will still be
on the high level. Besides, information from different sources
shows that the oil price will remain to be high with very little
possibility for a drastic price drop in 20