According to a new IHS Chemical global market study, demand for benzene, an aromatic hydrocarbon and one of the primary chemical building blocks for the petrochemical industry, has rebounded following the 2009 recession, with 2012 world benzene demand forecast to be 42.1 million metric tons, which is higher than the previous demand peak of 41.6 million metric tons in 2011. In the next five years, says the IHS Chemical 2013 World Benzene Analysis,global benzene demand is forecast to grow at more than three percent a year, reaching nearly 50 million metric tons by 2017.
However, despite this demand growth, an oversupply of new capacity is forcing some refiners to shut down refineries that produce benzene as a by-product. In addition, the drive to add renewable fuels into the U.S. transportation fuel supply is also impacting the supply of benzene from refineries and is limiting profitability for refiners, according to the study from IHS, the leading global source of information and analysis. The report was produced by IHS Chemical and covers historical developments and future projections for supply, demand, capacity and trade in the global benzene markets for 2007 to 2017, with a view of 2022 also shown. This analysis complements other related IHS World Analyses reports covering styrene and cumene, phenol and acetone.
“Last year, the outlook for future benzene production was bleak,” said Simon Moorhouse, global director of aromatics at IHS Chemical and one of the principal authors of the report. “This year, while we’ve seen demand growth reach a new peak in 2012, we remain cautious about the long-term outlook for benzene, since refineries today still find themselves facing a glut of new capacity.”
Originally produced as a by-product of coke production for the steel industry, today benzene is mainly produced as a by-product of refinery and steam cracker operations. As a result of its by-product status, benzene supply is driven mostly by the fate of the main products, gasoline, ethylene and paraxylene than by the profitability or demand for benzene. It is used primarily for the production of styrene, cumene (phenol), cyclohexane and other industrial chemicals.
In recent years, benzene capacity has been added mainly in Asia and the Middle East. This trend is expected to continue in the coming years as these regions are primarily where crackers and refineries are being built, although some light feed crackers are being planned in the U.S. to address the significant shale oil and gas resources coming online.
However, the IHS report noted, this U.S. shale crude oil gives naptha that is highly paraffinic (waxy), and as a consequence, results in a lower yield of benzene from reformers. As shale oil is relatively cheap compared to other crude oils in the U.S., its use is expected to grow, which will result in a reduction of benzene from reformate in the U.S.
“Not surprisingly,” said Moorhouse, “in the emerging economies such as China, the dynamic is quite different as the growth in automobiles is rapidly creating a strong appetite for gasoline and diesel fuel. China is now the largest auto market in the world. Despite the global refinery overcapacity, Asia continues to add refineries to fuel its growing demand for gasoline, and along with the growth in gasoline production comes growth in benzene supply.”
According to the report, production of ethylbenzene/styrene, cumene/phenol and cyclohexane will continue to consume more than 80 percent of the benzene produced in the coming years, and will have a combined annual growth rate of 3.5 percent during the study period.
In addition to the IHS Chemical 2013 Benzene World Analysis, IHS offers world analyses for other key chemicals, plastics and fiber intermediates on a continual basis. The reports provide comprehensive studies of long-term market trends, and most are produced on an annual basis with a five-year historical market review and a five-year supply/demand and price forecast. Other world analyses include: butadiene; butylenes; chlor-alkali, cumene, phenol and acetone; ethylene oxide and ethylene glycol; light olefins; acetyls; methanol; nylon feedstocks and fibers; petrochemical feedstocks; polycarbonate and ABS (derived from acrylonitrile, butadiene and styrene); polyethylene, polyolefins; polystyrene/expandable polystyrene (EPS); soda ash; styrene; terephthalates and polyester; toluene and mixed xylenes; and vinyls.