CMAI sees potential world propylene capacity shortfall in 2005-15

By the OGJ Online Staff

HOUSTON, Nov. 15 -- Chemical Market Associates Inc. predicts a shortfall in world propylene supplies in 2005-15.

It said about 50.2 million tons/year of PG-CG (polymer and chemical grade) propylene is produced in worldwide, most of which is produced by steam crackers as a byproduct of ethylene.

About 70% of this propylene is generated by steam crackers, 28% by refinery FCC units, and 2% by propane dehydrogenation or metathesis. Over the next 15 years, growth in world PG-CG propylene in supplies from steam crackers to the petrochemical industry is expected to average 4.2%/year.

CMAI said world refineries generate about 31.2 million tons/year of byproduct RG (refinery grade) propylene, most of which is generated in FCC units as a by-product of motor gasoline and distillates production. "Slightly more than half of this propylene production is already well integrated into the petrochemical industry, with competing refinery consumption processes including alkylation, polymer gasoline, or LPG/propane blending."

It said that over the next 15 years, growth in world RG propylene in supplies from FCC units to the petrochemical industry is expected to average 5%/year.

The CMAI study said the three largest polymer-chemical grade propylene producing regions in 2000 were West Europe, North America, and Northeast Asia, due to their relatively large populations and mature economies as well as their relatively large production base of steam crackers and refineries.

"In most regions of the world, petrochemical demand for propylene is growing more quickly than demand for ethylene. As a result, the construction of new steam crackers to meet new ethylene demand will not be sufficient to also satisfy growing propylene demand and other propylene supply sources will be required, particularly in the 2005-15 time period.

"Additional emphasis will be placed on recovering propylene from oil refinery FCC units in the future, involving the addition of ZSM-5 catalyst additives to potentially double propylene yields, and the addition of newer technologies such as DCC (Deep Catalytic Cracking). Metathesis, or other alternative olefin cracking technologies (MOI, Superflex, Propylur, etc.) will potentially quadruple propylene yields. Furthermore, other 'on-purpose' propylene technologies may become more economically viable, including propane dehydrogenation and methanol-to-olefins."

CMAI said world propylene prices are expected to continue to exhibit a cyclical "up-and-down" pattern in the future, due to fluctuations in energy prices and fluctuations in the supply-demand balance for propylene. It said the balance is expected to be relatively loose in 2001-02 (causing downward movement in prices) and relatively tight in 2004-06 (causing upward movement in prices).

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