Demand for Pure Benzene Is Brisk and Tends to Balance with Supply
Year:2015 ISSUE:14
COLUMN:ORGANICS
Click:256    DateTime:Aug.20,2015
Demand for Pure Benzene Is Brisk and Tends to Balance with Supply

By Zhang Qisheng, The Logistics and Marketing Centre of Sinopec Tianjin Branch

Pure benzene is an important chemical raw material, with derivatives including mainly styrene, aniline, adipic acid, caprolactam (CPL) and phenol. At present, the growth of demand for pure benzene remains fast. The supply is a bit tight. In recent years, hydrogenated benzene has developed rapidly as a substitute for pure benzene. China’s hydrogenated benzene capacity has reached a large scale. Hydrogenated benzene meets the technical quality criteria for petroleum benzene and its price is low.  

Growth of capacity has slowed but consumption keeps increasing

Impacted by low oil prices and changes in demand for pure benzene, the domestic market for pure benzene changed a lot in 2014. The growth rates of both production capacity and apparent consumption slowed down. Hydrogenated benzene continued to enter market. The import volume fell significantly. Prices rose and dropped sharply, averaging lower than in 2013.  
Only a little new pure benzene capacity was added in 2014, bringing the total to 10.53 million t/a. Existing capacity was expanded by CNPC Sichuan Petrochemical Company, Dongying Junyuan Petroleum Technical Development Co., Ltd., Sinopec Shijiazhuang Refining and Chemical Co., Ltd, Sinochem International Corporation, and CNOOC Hainan Oriental Petrochemical Co., Ltd.
During 2008-2013, both the apparent consumption and output of pure benzene went up steadily. Growth accelerated in 2009-2011, when the average annual growth rate of output approached 20%, and that of apparent consumption was 16.3%. In 2013, output growth slowed down, but the import volume doubled year on year, causing apparent consumption to grow 14.7% annualized. Given the slack economic situation in 2014, the apparent consumption of pure benzene dropped. China’s supply and demand for pure benzene in 2008-2014 is shown in Table 1.
Pure benzene is mainly used in making aniline, phenol, acetone, cyclohexanone, cyclohexane and styrene. The manufacture of styrene is the biggest use, consuming more than 40% of China’s pure benzene. The consumption pattern of pure benzene in 2014 is shown in Figure 1.

Table 1   China’s supply and demand for pure benzene

Year    2008    2009    2010    2011    2012    2013    2014
Output (kt)    3 950    4 638    5 543    6 659    6 626    7 191    7 356
Growth (%)    -3.00    17.40    19.51    20.13    -0.49    8.53    2.29
Imports (kt)    328    622    250.8    185.7    439.3    886.5    601.4
Exports (kt)    69    278    119.6    110.3    49.4    31.1    74.9
Apparent consumption (kt)    4 209.4    4 982.0    5 674.2    6 734.4    7 015.9    8 046.4    7 882.5
Self-sufficiency (%)    93.85    93.10    97.69    98.88    93.07    89.37    93.32



Shortage will persist
in the short term

Government policies have made it difficult to operate petroleum benzene factories at full capacity in recent years. The utilization of hydrogenated benzene factories was only around 36% in 2014, sacrificing a lot of potential output.
The annual demand for pure benzene will soon grow by 3.4 million tons, driven by the manufacture of styrene, phenol, cyclohexanone etc. Pure benzene capacity will grow more slowly than that of the capacity to make downstream products, perpetuating the shortage.
The capacity utilization rate of phenol is expected to remain around 74% in recent years. Among phenol makers, Sinopec Shanghai Gaoqiao Petrochemical Company, Sinopec Beijing Yanshan Petrochemical Company, SINOPEC SABIC Tianjin Petrochemical Company Limited, CNPC Jilin Petrochemical Company, Bluestar Harbin Petrochemical Company purchased nearly all their needed pure benzene from other subsidiaries of their parent companies or through long-term contracts, and have hardly bought any on the open market.
As stated above, styrene makers are collectively the biggest consumers of pure benzene. Most of the country’s styrene capacity is owned by Sinopec Group and CNPC. Sinopec Qilu Petrochemical Company and Sinopec Qingdao Refining Corporation Ltd. both use pure benzene supplied by another subsidiary of Sinopec. Shanghai Secco Petrochemical Co., Ltd., SP Chemicals (Taixing) Co., Ltd. and other foreign-funded styrene makers obtain raw material pure benzene through long-term contracts with Sinopec, purchasing imported goods at port, or purchasing from domestic traders. Shandong Yuhuang Chemical (Group) and other smaller styrene makers get benzene under long-term contracts with Sinopec in exchange for granting Sinopec Chemical Sales Company the role of selling their styrene output.
Table 2 shows the new pure benzene-consuming capacity to be started up in 2015. It can be seen that styrene, CPL and phenol/acetone capacities will expand fast. China's total capacity to produce styrene is predicted to grow by 1.32 million t/a before the end of 2017.


Table 2    New pure benzene-consuming capacity to start up in 2015

Company    Products    Capacity (kt/a)    Startup date    Location    Intended raw materials
Shandong Yuhuang Chemical (Group)    Styrene    240    Mar-Apr, 2015    Shandong    Hydrogenated benzene/ Petroleum benzene
Sinopec Jiujiang Branch    Styrene    80    2015 Q2    Jiangxi    Petroleum benzene
CNOOC Hainan Oriental Petrochemical Co., Ltd.    Styrene    120    Apr, 2015    Hainan    Petroleum benzene
Shandong Huatai Paper Co., Ltd.    Aniline    100    2015 Q2    Shandong    Hydrogenated benzene/ Petroleum benzene
Ningbo Formosa Chemicals & Fibre Corp.    Phenol    300    End of Feb, 2015    Zhejiang    Petroleum benzene
ERTISA Shanghai     Phenol    250    End of Jan, 2015    Shanghai    Petroleum benzene
Shandong Fangming Chemical Co., Ltd.    CPL    100    Mar, 2015    Shandong    Hydrogenated benzene/ Petroleum benzene
Shanxi Lanhua Sci-Tech Venture Co., Ltd.    CPL    100    2015 Q2    Shanxi    Hydrogenated benzene/ Petroleum benzene
Yangquan Coal Industry (Group)  Yangquan Site    CPL    100    2015 Q3    Shanxi    Hydrogenated benzene/ Petroleum benzene
Shanxi Kingboard Lubao Chemical Co., Ltd.    CPL    100    2015 H2    Shanxi    Hydrogenated benzene/ Petroleum benzene
Luxi Chemical Group    CPL    100    2015 H2    Shandong    Hydrogenated benzene/ Petroleum benzene
Yangquan Coal Industry (Group) Qingxu Chemical Park Site    Adipic acid    140    2015 Q2    Shanxi    Hydrogenated benzene/ Petroleum benzene
Chongqing Huafon Chemical Co., Ltd.    Adipic acid    160    In wet commissioning     Chongqing    Petroleum benzene


Conclusion

The domestic supply and demand for pure benzene will remain unchanged in 2015-2016. It is difficult to manufacture enough hydrogenated benzene to eliminate the supply deficit, because of the persistent shortage of raw materials. With increasing pure benzene capacity and slowing demand growth, supply and demand will tend to balance until oversupply arises in 2017.