EUROPE CHEMICAL PROFILE Butadiene€¦ · According to European statistics agency Petrochemicals...

ButadieneUSESButadiene also known as 1,3-butadiene is used primarily as a monomer in the manufacture of synthetic rubbers – its largest single use is in the production of styrene butadiene rubber (SBR) which is principally used in the manufacture of automobile tyres. Other synthetic rubbers include polybutadiene rubber (PBR) – tyres and plastics such as acrylonitrile butadiene styrene (ABS), polychloroprene (neoprene) – gloves, wetsuits and foams and nitrile rubber (NR) – hoses, gloves, seals.

SUPPLY/DEMANDAccording to European statistics agency Petrochemicals Europe, European production of butadiene has increased year-on year since 2013 and hit the 2m tonne mark in 2015 – the highest output since 2011 – although this can be explained by the new capacities that were brought online in the latter part of 2014 and into 2015. Output in 2015 was about 71% of available nameplate capacity and production in 2016 is likely to be around 7% higher. Demand growth for the year was likely to be close to 1% so most of the incremental supply has gone into exports to Asia and the US.

A pattern of improved demand and higher spot pricing led to first increase in monthly contract prices since July 2015 which came in April 2016. Europe’s supply was then constrained through planned and unplanned outages and hiccups at crackers as well as BD extraction units which counteracted a demand dip in Asia. However, domestic consumers still sought out dwindling spot supplies and prices remained above the prevailing contract price levels.

Firmer feedstock values supported further increases in the contract price – the turnarounds were over but renewed demand from Asia was starting to again support trader sentiment.

Although supply issues during the second quarter had been resolved, other planned turnarounds, unexpected hiccups and heat constraints kept output constrained. Domestic demand was healthy, while firming prices in Asia and in the US keep demand for export at a high level as well.

With European supply remaining tight, and with renewed buying appetite from both domestic and Asian buyers, domestic spot prices surged ahead through the month and further increases were seen in contract prices.

Maintenance turnarounds, unplanned issues and ongoing restrictions on crude C4 output kept BD output constrained, but even when availabilities improved towards the end of the year, strong demand from the export sector amid soaring Asian prices kept competition for all available spot tonnes fierce.

PRICINGLarger gains were secured on the contract price – in November settling at its highest level since November 2014. The strong demand, tight supply situation showed no signs of abating as the market moved into the year-end, rather the opposite as Asian demand strengthened further as local derivative demand surged ahead of the Chinese lunar New year in late January and in Europe, the 2017 turnaround season was due to get off to an early start.

There was a brief respite for domestic contractual consumers in December, with the contract price rolling over, the softer upstream market was offset by the tight market conditions.

Spot prices rose considerably through December and escalated into January 2017 and the demand on European supply was extreme. A €140/tonne increase for the January contract was dwarfed by the highest ever increase for February – €460/tonne, taking the contract price to its highest level since June 2011.

by Nel Weddle | First published on 20 February, 2017

© Copyright 2017 Reed Business Information Ltd. ICIS is a member of RBI is part of RELX Group plcICIS accepts no liability for commercial decisions based on the content of this report

EUROPE BD

0

500

1,000

1,500

2,000

2,500

Feb2017

Feb2016

$/tonne, spot

FD NWE FOB ARA

EUROPE CHEMICAL PROFILE

TECHNOLOGYMost BD is obtained a by-product in the steam cracking of naphtha to make ethylene and propylene. The feedstock determines the yield: light feedstock yields five times less BD than heavy feedstock.

Other processes include the dehydrogenation of purified n-butene or butanes from steam crackers or C4 refinery streams.

A few companies continue to look at biobased routes for example – Genomatica in partnership with Versalis and Braskem and LanzaTech partnered with INVISTA. Cobalt Technologies announced partnership agreements with two undisclosed Asian companies. Tyre manufacturers are also investigating the biomass route such as Michelin’s collaboration with Axens and Tereos

OUTLOOK Some increase in BD production is expected for 2017 and 2018 but this will very much depend on Crude C4 availability and average operating rates are unlikely to move much above 80%. Demand growth is expected to remain around 1% in 2017 and net exports may increase towards 350,000 tonnes.

Company Location Capacity

INEOS Cologne, Germany 245

LyondellBasell Wesseling, Germany 238

Evonik Marl, Germany 220

Dow Terneuzen, Netherlands

180

BASF Antwerp, Belgium 155

Versalis Brindisi, Italy 145

Versalis Ravenna, Italy 140

SABIC Geleen, Netherlands 130

Naphtachimie Lavera, France 120

Repsol Chemicals Tarragona, Spain 120

Shell Moerdijk, Netherlands 115

BASF Mannheim, Germany 105

Dow Chemical Boehlen, Germany 105

Evonik Antwerp, Belgium 100

SABIC Wilton, UK 100

ExxonMobil Notre-Dame de Gravenchon, France

80

LyondellBasell Berre, France 80

INEOS Grangemouth, UK 71

OMV Burghausen, Germany 70

Versalis Porto Marghera, Italy 70

EUROPE BD CAPACITY ’000 TONNES/YEAR

BUTADIENE - EUROPE CHEMICAL PROFILE


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PBR27% DERIVATIVEn Polybutadiene rubber is used for tyre treads, as well as belts,

hoses, gaskets and other automotive parts, as it resists cold temperatures better than other elastomers

n Demand is expected to remain healthy amid improved automotive sector in Asia

n PBR prices likely to remain stable to firm in H1 2017 on the robust tyre market in China

n Competitively priced deep-sea cargoes from Europe and the US to head to Asia

n Strong natural rubber prices will bolster Asia PBR prices as they are rival substitutes

$/tonne, high-CIS grade, spot CFR NE Asia

ASIA PBR PRICES

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Feb2017

Jan2016

NOTE: Only Asia prices for PBR available

Butadieneby Tracy Dang, Helen Yan, Judith Wang, Clive Ong, Nel Weddle, Melissa Hurley, David Love

First published on 6 March, 2017

VALUE CHAIN

BUTADIENEFEEDSTOCKn Asia supply is expected to remain tight in H1 2017 due to several

turnaroundsn Demand in Asia expected to be firm in Q1 and Q2 due to improved

downstream synthetic rubber sectorn China’s robust downstream synthetic rubber and end-use tyre

sectors have boosted Asia BD import pricesn Europe spot prices hit five-year highsn Europe supply tight on a string of production issues. Upcoming

planned turnarounds will keep output tightn Improved BD sees naphtha gain favour as preferred cracker

feedstock n US domestic supply tight with two producers on supply allocationn Traders were looking to export to Asia in early 2017, but by

February, focus began turning to the US amid constrained supply there

$/tonne, spot

FOB ARA (Europe)CIF US GulfCFR NE Asia

GLOBAL BD PRICES

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Feb2017

Jan2016

GLOBAL BD PROJECTS

COMPANY, LOCATION CAPACITY* START-UP

Jiangsu Sailboat Petrochemical, China

100 H2 2017

CSPC, China 165 Q4 2017

Chandra Asri, Indonesia 137 Q3 2018

Zhejiang Rongsheng, China 200 Late 2018

BUTADIENE - VALUE CHAIN


ABS12% DERIVATIVEn Acrylonitrile-butadiene-styrene is a lightweight, shock-absorbent

polymer that can be injection-moulded for use in auto bumpers and trim; household and consumer goods; and medical devices

n Asia demand expected to remain firm as China economy shows signs of revival. China plants expected to keep high rates

n Expansion and projects in China to further increase Asia capacityn Europe ABS reaches record highs at start of Q1 2017 on bullish

styrenen Price gap between Europe and Asia reduced in 2016; European

market to be in a better position against Asian competition in 2017n US contract prices pressured higher by surging feedstocks styrene

and butadiene, and also higher prices for acrylonitrilen US saw ABS imports climb in 2016, while exports fell. Korea,

Mexico and Taiwan supplied 85% of total US imports

$/tonneInjection Moulding, Natural domestic FD NWEInjection Medium, bulk domestic FD USGeneral Purpose, Injection Grade, spot CFR NE Asia

GLOBAL ABS PRICES

1,000

1,500

2,000

2,500

3,000

Feb2017

Jan2016

GLOBAL ABS PROJECTS


Trinseo, China 140 H2 2017

CNOOC LG, China 150 End 2017

Shandong Haili, China 500 N/A

Keyuan PC, China 400 N/A

SBR36% DERIVATIVEn Main end-use in tyre products. Nonauto uses include footwear,

industrial hoses, conveyor belts, gloves, adhesives and chewing gum

n China’s strong domestic SBR sector is likely to support Asia pricesn Asia demand likely to remain healthy on robust automotive sectorn Prices likely to remain stable to firm in correlation with natural

rubber prices n Deep-sea SBR cargoes head to Asia on lucrative marginsn Europe spot material very limited. Exports from Europe to Asia

hamper domestic supplyn Several tyre companies in Europe announce end-user price

increases n US players await determination in antidumping investigation on

emulsion SBR imports from Brazil, Korea, Mexico, Poland

$/tonne, spot

SBR 1502, Non-Oil Grade, FOB US Gulf

SBR 1502, Non-Oil Grade, CIF ChinaSBR 1500, Non-Oil Grade, FD NWE

GLOBAL SBR PRICES

500

1,000

1,500

2,000

2,500

3,000

3,500

Feb2017

Jan2016

GLOBAL SBR PROJECTS


MOL, Hungary 60 2017

Trinseo, Germany 50 N/A



$/tonne, spot

PBR, High-CIS Grade, CFR NE AsiaABS, General Purpose, Injection Grade, CFR NE Asia

SBR 1502, Non-Oil Grade, CIF ChinaButadiene, CFR NE Asia

BUTADIENE VALUE CHAINS - ASIA

500

1,000

1,500

2,000

2,500

3,000

3,500

Feb2017

Jan2016

$/tonne

ABS, Injection Moulding, Natural, domestic FD NWESBR 1500, Non-Oil Grade, spot FD NWEButadiene, spot FOB ARA

BUTADIENE VALUE CHAINS - EUROPE

0

500

1,000

1,500

2,000

2,500

3,000

Feb2017

Jan2016

$/tonne

ABS, Injection Medium, bulk domestic FD USSBR 1502, Non-Oil Grade, spot FOB US GulfButadiene, spot CIF US Gulf

BUTADIENE VALUE CHAINS - US

500

1,000

1,500

2,000

2,500

3,000

Feb2017

Jan2016

REGIONAL BREAKDOWN OF BUTADIENE VALUE CHAIN

+15%Change in Europe

ABS prices from their low to high in

the past year

+285%Surge in Asiabutadiene pricesyear on year to early February 2017

+105%Increase in US SBR prices from their 52-week low to early February 2017 high



GLOBAL SUPPLY AND DEMAND FOR BUTADIENE CHAIN

%

Capacity Utilisation Rate

GLOBAL BD SUPPLY AND DEMAND

m tonnes

Total production

Total capacity

10

12

14

16

18

20

2022202120202019201820172016201520142013201270

74

78

82

86

90

SOURCE: ICIS Supply and Demand Database

%


GLOBAL SBR SUPPLY AND DEMAND

m tonnes

Total production

Total capacity

5

7

9

11

13

15

2022202120202019201820172016201520142013201270

73

76

79

82

85


%


GLOBAL PBR SUPPLY AND DEMAND

m tonnes

Total production

Total capacity

1

2

3

4

5

6

2022202120202019201820172016201520142013201265

69

73

77

81

85


BUTADIENE

84%Projected butadiene operating rate by 2020 versus 80% in 2016n Capacity to rise more than 16% between 2016 and 2020n 2015 was likely the bottom in capacity utilisation rate at 78%,

following years of consecutive declines

SBR

77%Projected styrene butadiene rubber operating rate by 2020n Capacity utilisation rate to gradually increase through 2019 and

then level off after years of consecutive declines through 2016n Operating rates last hit 80% back in 2013. Capacity has since

risen over 13%

PBR

77%Projected polybutadiene rubber operating rate by 2020n Capacity expected to rise over 7% through 2020 versus 2016

levelsn Operating rates to rebound starting in 2018 from a multi-year

trough that is expected to last through 2017



%


GLOBAL ABS SUPPLY AND DEMAND

m tonnes

Total production

Total capacity

5

7

9

11

13

15

2022202120202019201820172016201520142013201265

71

77

83

89

95


ABS

81%Projected butadiene operating rate by 2020 versus 80% in 2016n Capacity expected to increase over 10% by 2020 from 2016

levelsn Operating rates started to recover in 2015 after years of

languishing around 70%

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The 6th ICIS European Butadiene and Derivatives Conference

13 – 14 September 2017 // Novetel Munich City, Germany

THE 5th ICIS US Butadiene and Derivatives Conference

December 6, 2017 // Manhattan, New York, USA

Register before 7 July and save €250 off the standard registration fee. To secure your discount make sure you quote EYY44621 when registering.

www.icisconference.com/butadiene Tel:+44 (0) 20 8652 4659

Make sure you do not miss this opportunity by registering your interest today:[email protected] Tel:+44 (0) 20 8652 8384

This year’s conference will address crucial questions asked by butadiene producers, buyers, end-users and traders, and explore new market opportunities in light of a recovering global demand. Attend today to hear from INEOS, SABIC and many more top industry players and make sure your company takes advantage of the changing market.

Attend this event to network with the likes of:Arlanxeo, Braskem, Bridgestone, Firestone Polymers, Evonik, Good Yea Tire & Rubber, Ineos, LyondellBasell, Michelin, Solvay, TPC Group, Wacker Chemie.

Hear expert analysis on the key drivers and trends affecting the butadiene, rubber and derivatives markets.

Meet key stakeholders from the entire value chain and discuss the crucial issues for 2018.

NEW FOR 2017:n New global angle: Focus sessions on Europe, China,

India and Irann Even more derivative trends - Rubbers, latices, ABS and

polyamides

EUROPE CHEMICAL PROFILE Butadiene€¦ · According to European statistics agency Petrochemicals...

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