The US petrochemical industry might be buzzing about all the cheap ethylene it can now make thanks to inexpensive ethane from shale gas plays. And while that certainly is helping position US polymer producers nicely in the global marketplace, there is another side to the shale coin.
The introduction of lighter feedstocks in both the cracker and the refinery is resulting in some serious production cuts in propylene, crude C4 and pygas. Plans for on-purpose propylene through propane dehydrogenation and on-purpose butadiene will help offset the cuts in those markets. However, there is a potential for a serious supply pinch in North American aromatics because of the trend to lighter feedstocks.
Ethylene co-product supplies of benzene have dropped from over 4,000 mt/d in 2010 to around 2,500 mt/d currently. Refineries are the largest source of benzene, and benzene production from refineries is also on a downward trend. The reformer, a unit that reforms naphtha to reformate, is the main source of aromatics at a refinery. Therefore, reforming run-rates would indicate the supply level of benzene.
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Much like FCC rates, reformer rates have tracked closely with gasoline demand over the past four years. Hence, with gasoline demand falling in the US, benzene supplies from the reformer should follow suit. Another factor to take into consideration is the impact of lighter crude oils on the naphtha market and downstream aromatics market.
Naphtha derived from these crudes has a lower naphthalene and aromatics content, which results in a lower output of benzene and valuable toluene and xylene. Benzene output from reformate has dropped from roughly 2.5 % to 2% since 2010.
Refinery benzene production is expected to continue its slide amid reduced reforming run-rates and lower aromatic naphtha. It is expected that benzene from reformers is going to continue its slide, touching 7,000 mt/d by 2020 but dip below that level by the end of the ten-year forecast period.
Benzene production as an ethylene co-product is expected to remain depressed relative to historical levels. Production, which is currently around 2,500 mt/d, is anticipated to move slightly higher as more crackers come online. Cracker-sourced benzene will sit at roughly 3,000 mt/d by 2020, but supplies will remain flat for the remainder of the forecast period, well below were cracker benzene supplies stood a decade ago (3,780 mt/d).
Toluene disproportionation, another source of benzene, is expected to climb slightly as tightness in the benzene market offers positive margins for on-purpose benzene production. Disproportionation production of benzene will climb of a current level of 3,100 mt/d to 3,660 mt/d.
Production levels will increase slightly from current levels to just over 14,000 mt/d at the end of the forecast period. However, this level of supply–assuming marginal growth in styrene demand–will fail to meet the needs of downstream derivative markets.