Slow Expansion of o-Xylene Capacity Impedes the Entire Industrial Chain

By Zhang Qisheng, Tianjin Petrochemical Co., Ltd.

China’s o-xylene capacity in November 2015 was 1.39 million t/a. Capacity expansion is much lower than the growth of demand from the makers of phthalic anhydride. The shortage can hardly be mitigated, so around 40% of China’s o-xylene has to be imported. Table 1 shows the capacity of o-xylene units in China in 2015.
The apparent consumption of o-xylene in China has declined steadily since 2012 (see Table 2), from 1.41 million tons in 2012, it dropped 8.9% to 1.28 million tons in 2013, and a further 3.5% to 1.24 million tons in 2014. In 2015, the apparent consumption from January to October was 928.5 kt.
The import of o-xylene has also declined, dropping 20.5% from 698 kt in 2012 to 555 kt in 2013, and 13.2% further in 2014, to 482 kt.
The rapid development of China’s construction, communications, electronics and aviation sectors in recent years has driven a constant increase of consumption of the downstream products of phthalic anhydride. Therefore, the phthalic anhydride sector is enjoying rapid growth, with capacity reaching 2.58 million t/a today. The growth of o-xylene capacity is however much slower, and the gap is widening all the time. China now has excess phthalic anhydride capacity and too little o-xylene capacity.

Table 1    Capacity of o-xylene units in China, 2015 (kt/a)

Producer    Capacity
Sinopec Yangzi Petrochemical Co., Ltd.    260
Zhenhai Petrochemical Co., Ltd.    160
Sinopec Jinling Petrochemical Co., Ltd.    130
Sinopec Qilu Petrochemical Co., Ltd.    40
PetroChina Sichuan Pengzhou Petrochemical Co., Ltd.    50
Luoyang Petrochemical Co., Ltd.    40
PetroChina Jilin Petrochemical Co., Ltd.    120
Liaoyang Chemical Fiber Co., Ltd.    60
PetroChina Fushun Petrochemical Co., Ltd.     10
Dalian Fujia Dahua Petrochemical Co., Ltd.    100
CNOOC Huizhou Petrochemical Co., Ltd.    80
Fujian Tenglong Aromatics Co., Ltd.    240
Hainan Refining & Chemical Co., Ltd.    100
Total     1 390


Table 2   Supply/demand for o-xylene in China, 2012-2015  (kt)


Year    Capacity
(kt/a)    Output    Import
amount    Export
amount    Apparent
consumption    Self-sufficiency
rate (%)
2012    1 030    716.6    698.4    0.0079    1 407.1    50.9%
2013    1 330    726    555.3    0.0089    1 281.3    56.7%
2014    1 350    753.5    482.4    0.02424    1 235.9    61%
Jan. - Oct. 2015    1 390    627.8    300.9    0.2002    928.5    68%



More than 95% of all the o-xylene in China is used to produce phthalic anhydride. The consumption of o-xylene grew steadily in previous years, exceeding 10% annually. The demand for phthalic anhydride from makers of plasticizers and unsaturated resins increased constantly, promoting rapid growth of o-xylene demand. The growth of o-xylene consumption slowed down at some point, because the phthalate plasticizer sector slowed down in order to begin protecting the environment in accord with changing state policy, weakening the demand for phthalic anhydride.
The market for o-xylene was weak in the second half of 2014 and in the beginning of 2015, giving rise to considerable concern about costs. The o-xylene unit of Fujian Tenglong Aromatics Co., Ltd. exploded in the second quarter of 2015, reducing the supply. So the market improved, and profits picked up accordingly. But in the second half of 2015, the market slowed down again. The long-slack market for industrial naphthalene has also constrained the phthalic anhydride market.
As quite a few phthalic anhydride units employing the o-xylene process will be constructed in 2016, o-xylene will remain in short supply. However, the gradually increasing proportion of new phthalic anhydride units employing the naphthalene process will impact o-xylene demand growth considerably. No increase in the market price of o-xylene is expected in 2016.
The high profits of the phthalic anhydride/DOP sector in its initial years stimulated rapid capacity expansion, but China’s capacity to supply the requisite raw materials failed to keep pace. The low output and limited supply of butanol/octanol and o-xylene provided by petrochemical producers and importers have constrained the makers of phthalate plasticizers for many years. The o-xylene/phthalic anhydride/DOP industrial chain faces huge challenges going into the future, and integration of this chain is inevitable.