Benzene profits will decrease slightly through 1995, while styrene monomer (SM) producers will experience significant profit declines as overcapacity drives prices down, says DeWitt & Co. Inc., Houston.
The outlook through 1995 is better for benzene than SM despite slower growth of global benzene markets and lower utilization of manufacturing capacity, DeWitt says.
Use of benzene capacity during 1990-95 will average 72%, about 4 percentage points less than in 1987-89. SM capacity utilization will average about 80% in 199295, down from 95% in 1989.
That's comparatively good news for benzene producers because small swings in capacity utilization don't affect benzene markets as much as low utilization of SM capacity, says William P. Barry, DeWitt group vice-president.
Global benzene capacity can operate effectively at 85% utilization. With operating rates averaging slightly more than 70%, more benzene capacity will not be needed until after 1995, DeWitt says.
Announced additions to SM capacity of 5.9 million tons through 1995 will greatly exceed expected demand.
BENZENE MARKETS
World benzene demand will grow 3.8%/year to 26.5 million tons in 1991-95 from 22 million tons in 1990.
Starting from no growth this year and 2.5% growth during 1992, demand will increase by an average 5.5%/year during 1993-95, DeWitt says. During 1985-90, benzene demand grew 4.9%/year yearly.
Benzene demand will grow most through 1995 in DeWitt's Far East/Asia region, about 5.9%/year. Yet benzene exports from the region will increase as production grows by 7.5%/year.
Global benzene capacity will increase to about 36.7 million tons in 1995, a 6 million ton increase since 1990.
Benzene consumption in the U.S. will increase by an average of 3%/year and in western Europe by 3.4%/year. DeWitt expects demand in eastern Europe and South America to remain unchanged through 1993 and begin increasing in 1994.
Use of total benzene derivative capacity will recover in 1995 to 78.1% after failing below that average about 1993. In 1990, utilization of total benzene derivative capacity was 81.3%, DeWitt says.
STYRENE OUTLOOK
DeWitt predicts global SM demand will increase 4.7%/year to 17 million tons in 1995 from 13.6 million tons in 1990. SM additions will lift global manufacturing capacity to 20.7 million tons in 1995 from 14.8 million tons in 1990.
Far East/Asia will pace SM demand, increasing by 6.1%/year during 1990-95. However, imports into the region will decrease to about 500,000 tons in 1995 from 1 million tons in 1990 as Far East/Asia producers add 2.8 million tons of SM manufacturing capacity, DeWitt says.
In the U.S, SM production and demand will increase about 3.4%/year during the forecast period. U.S. SM exports will continue averaging 300,000-400,000 tons/year.
SM imports into western Europe will fall as SM production increases by an average of 4.3%/year and demand grows 3.8%/year, DeWitt says.
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