Benzene Demand Keeps Growing in China      

CCR Consulting Dept.

In China, benzene is either petroleum based or coking based. Petroleum based benzene mainly comes from the catalytic reforming process in the petroleum refining industry, and coking benzene is produced by hydrogenating coking benzol and by acid washing and refining coking benzol. Petroleum based benzene accounts for 80% of China's total benzene output, and the rest is coking based benzene. China now has more than 70 benzene producers, having a total petroleum benzene capacity of 6.316 million t/a.
   Both PetroChina Fushun Petrochemical Company Limited's 170 000 t/a pure benzene unit and Sinopec Wuhan Petrochemical Company Limited's 120 000 t/a pure benzene unit will be completed and come onstream in 2010. The refining, cracking and aromatics plant in Pengzhou, Sichuan province that CNPC originally planned to start up in 2010 will be postponed for 1 - 2 years due to the 2008 Sichuan earthquake. The benzene unit in this plant has a design capacity of 350 000 t/a. PetroChina Company Limited, a subsidiary of CNPC, is also constructing a one million t/a para-xylene unit using the technology of UOP LLC, which covers a benzene unit with a design capacity of 360 000 t/a. If the above projects are completed and put into operation on schedule, China's petroleum benzene capacity will soon reach 7.3 million t/a.
   In China, benzene is mainly used to produce styrene, nitrobenzene, phenol, caprolactam, alkyl benzene, maleic anhydride, chlorobenzene and adipic acid. It is also used as a solvent. Styrene production is the largest use of benzene, accounting for 35% of the total benzene consumption.
    In 2009, China's petroleum benzene output was 4.638 million tons, up 15% year on year, and its apparent consumption was 4.98 million tons, up 28.1% year on year. In the past two years, in China, as both the capacity to make styrene and phenol and the demand for them grow rapidly, the import of benzene also increases year by year.
   With the steady increase of demand from downstream industries, China's benzene equivalent consumption (including coking benzene) will reach over 8 million tons in 2010.

    1. China's demand for styrene is still growing steadily. Styrene is the most important derivative of benzene. Despite the financial crisis, since 2008, China's demand for styrene has still maintained an annual growth rate of 5%. As a number of new and expanded styrene projects are carried out one after another, it is expected that in 2010, China's styrene capacity will reach nearly 6.3 million t/a, which will demand 5.6 million tons of benzene.

    2. The money-losing aniline industry is slowing down its growth of demand for benzene. In recent years, driven by the rapid growth of China's demand for MDI and rubber additives and some chlor-alkali enterprises' demand for the digestion of their by-product hydrogen, China's capacity to make aniline has increased very fast. However, the growth of aniline consumption is much slower than the growth of aniline capacity, so oversupply has appeared. The margins of aniline producers are shrinking. And due to the rise of environmental, logistical and security costs, many small and medium aniline producers have actually been on the verge of losing money. In the future, the growth of aniline maker's demand for benzene is expected to slow down, reaching around 900 000 tons in 2010.

    3. In the phenol industry, the demand for benzene will continue to increase. According to statistics, China's phenol/acetone units that are under construction in 2010 have 2.91 million t/a combined design capacity to produce phenol. In 2010, China's total phenol capacity will reach 1.08 million t/a, and its demand for benzene will reach about 890 000 tons.

    4. The demand for benzene from other downstream products will continue its stable growth. It is expected that in 2010, the demand for benzene from caprolactam, maleic anhydride, chlorobenzene and dodecyl will be nearly 350 000 tons, 200 000 tons, 180 000 tons and about 200 000 tons, respectively.
   Overall, the market demand for benzene is increasing year by year in China. But with the rebound of international crude oil prices and the rise of labor and environmental costs, the cost of petroleum based benzene will increase. Coking based benzene, which is made by hydrogenating coking benzol and then acid washing and refining coking benzol, will regain some competitiveness. Now, coking based benzene has been successfully used to produce aniline, adipic acid and other products. With the constant increase of the coking benzene capacity, in some application fields, petroleum based benzene will be replaced by coking based benzene.


China's Supply of Petroleum-based Benzene
(thousand tons)
Year    Output    Imports    Exports    Apparent consumption
2002    2 131    42      90      2 083
2003    2 408    10      109     2 309
2004    2 556    53      14      2 595
2005    3 061    255     16      3 300
2006    3 441    298     19      3 549
2007    4 069    249     56      4 251
2008    4 033    328     69      3 889
2009    4 638    622     278     4 982
Source: CNCIC