Pure Benzene Will Be Serous Short of Supply

By John Zheng

Benzene is one of the important basic raw materials for
petrochemicals. It can be used to synthesize a series of
important chemical products such as synthetic rubbers,
synthetic resins, synthetic fibers, pharmaceuticals,
pesticides, explosives and dyestuffs. It can also be used as a
solvent for coatings and rubbers and as a blending agent to
increase gasoline's octane number in the refining sector.

Rapid output increase

Benzene produced in China today is mainly petroleum benzene from
refining units and ethylene units, and coking benzene from
coking byproducts. With the completion of large petrochemical
and chemical fiber units, the proportion of petroleum benzene
is constantly increasing. The output of petroleum benzene is
already much higher than coking benzene and accounts for around
85% of the total. Petroleum benzene units are mainly distributed
in Sinopec Group and CNPC. Coking benzene units are mainly
distributed in metallurgical companies.
    China's capacity to produce pure benzene was 3.995 million
t/a in 2006 and the output was 3.441 million tons, an increase
of 12.4% over 2005. Of that total, Sinopec Group produced 1.8301
million tons, accounting for around 53.2% and CNPC's output was
748.8 thousand tons, accounting for around 21.8%.
   Pure benzene is mainly used in the chemical industry. Major
chemical products with pure benzene as raw material include
styrene, cyclohexane, phenol, nylon 66 salt, chlorobenzene,
nitrobenzene, alkylbenzene and maleic anhydride. With rapid
demand growth in downstream products, the consumption of pure
benzene in China constantly increased in recent years. The
apparent consumption reached 3.30 million tons in 2005.

Constant import growth

Owing to the rapid capacity expansion of downstream products,
especially the expansion and construction of styrene, phenol,
aniline and cyclohexanone units, the demand for pure benzene in
China has increased drastically in recent years. To meet the
growing downstream demand, the import of pure benzene has grown
at much the same pace. The imported amount reached 255 thousand
tons in 2005, an increase of 381% over 2004. China imported 298
thousand tons of pure benzene in 2006, a rise of 16.9% over 2005.
With the constant construction and expansion of downstream units
in the next few years, the pure benzene produced in China cannot
catch up with the downstream demand and the imported amount will
continue growing constantly.
   The biggest source for the import of pure benzene in 2005 was
Korea. Japan and Malaysia came next. In 2006 it was still mainly
from Korea, with Korea accounting for around 77% of the total.
Small amounts were from Japan and other countries. It is expected
that Korea will still be the major source for the import of pure
benzene in China for the next few years. The Middle East will
also gradually become a stable source for the import of pure
benzene in China.
   China exported 190 thousand tons of pure benzene in 2006, an
increase of 174 thousand tons over 2005. The major reason for
the rapid export increase in 2006 was an oversupply in the
domestic market caused by rapid capacity expansion (the capacity
increased by more than 800 thousand t/a in 2006). The inventory
of producers and the inventory elsewhere were both at a high
level. To ease the pressure of oversupply in the domestic market,
Sinopec and some dealers made great efforts to increase exports.

Rapid capacity expansion

Based on the construction and expansion plans in some large
petrochemical companies, the capacity expansion of pure benzene
in China before 2010 will mainly come from the following 3
sources. (a) Expansion of aromatic extraction units through the
renovation of existing ethylene units and completion of aromatic
extraction units through the construction of new ethylene units:
The newly added capacity to co-produce pure benzene is expected
to be around 1.0 million t/a in 2010. (b) Expansion and
construction of aromatic units in refineries: The newly added
capacity for pure benzene is expected to be around 200 thousand
t/a in 2010; (c) Expansion and construction of PX (para-xylene)
units: The newly added capacity for pure benzene is expected to
be around 1.1 million t/a in 2010. It is therefore expected that
the total capacity of pure benzene in China will reach around
6.30 million t/a in 2010.
   With the constant completion of downstream units, the demand
for pure benzene in China has grown dramatically in recent years.
The capacity expansion for pure benzene in the next few years
will be quite limited. The market gap will be widened and the
dependence on imports will be higher. It is expected that the
demand for pure benzene in China will reach around 7.50 million
tons in 2010. Even if the operating rate of production units
reaches 100%, the local supply deficit will still be 1.20 million
tons.

Table 1  Major Pure Benzene Producers
                in China in 2006    
Producer                             Output (thousand tons)
Sinopec Yangzi Petrochemical Co.     393.8  
Sinopec Shanghai Petrochemical Co.     280.3  
Shanghai Secco Petrochemical Co.     229.3  
CNPC Jilin Petrochemical Co.        228.3  
Sinopec Zhenhai Refining and Chemical Co.    215.2  
Sinopec Beijing Yanhua Petrochemical Co.     191.5  
Sinopec Qilu Petrochemical Co.      171.5  
Sinopec Tianjin Petrochemical Co.     155.0  
CNPC Liaoyang Petrochemical Co.     144.3  
Sinopec Luoyang Petrochemical Co.     127.7  
Sinopec Maoming Petrochemical Co.     124.2
BASF-YPC Co.                         112.8
Baosteel Co.                        104.4
CNPC Daqing Petrochemical Co.        88.6
Source: CNCIC

Table 2  Supply and Demand of Pure Benzene   
          in Recent Years       (thousand tons)  
Year    Output    Import    Export    Consumption  
2000    1 847    75      90    1 832  
2001    1 970    62      39    1 993  
2002    2 131    42      90    2 083  
2003    2 408    10