Aromatics value chain to only survive if customers thrive, Sven Royall
After two years of very tough business conditions for the C6 aromatics value chain, Sven Royall, Shell Chemicals Vice President for Intermediates, said that there is now “a ground swell of opinion throughout the industry that better times are coming.” He was speaking at the 9th European Aromatics & Derivatives Conference in Berlin, Germany.
While recognising that there are still numerous and complex challenges to be met relating to competition, supply, cost or sustainability issues, Mr Royall said: “There are also significant opportunities for future growth if the supply chain remains flexible, competitive and creative.”
Shell is a major global aromatics producer and significant supplier of benzene, styrene and phenol-acetone, the key building blocks for the C6 chain. Mr Royall noted that Shell's “major customers and their customers are expressing confidence that the materials and products made from or with aromatics will continue to be in demand, with new applications driving growth in a number of markets.”
Aromatics have suffered major demand disruptions in the wake of the 2008 global financial and economic meltdown, said Mr. Royall. “Global styrene producers, for example, are still grappling with average industry operating rates around 82%, the lowest since 1990. And while phenol operating rates have perked up this year, last year they averaged around 75%.”
Since late 2008, two key C6 end-use markets – automotive manufacturing and construction – have been in a deep trough. But it is in these two key end-use markets, which are now slowly recovering, where much of the future growth in C6 value chain demand is likely to emerge.
“In large part, this will be because C6-derived products are well suited to meet the needs of a low-carbon age. Their lightweight and insulating properties can help reduce energy consumption and lower CO2 emissions, while their 'processability' is enabling designers to engineer a variety of stronger, more flexible parts and products that meet the needs of a wide range of manufacturing industries,” said the Shell vice president.
Industry indicators through 2010 suggest strengthening demand, the Shell executive continued. For the period 2011-2014, Shell and CMAI estimate potential annual benzene demand growth of 3.9%, which is underpinned by derivates demand growth, including 3.6% for styrene, 5.1% for cumene/phenol (3.5%) and aniline (4%).
There are reasons to be optimistic about the ongoing demand prospects for the C6 value chain, but “players along the value chain will need to work together to develop the products that take advantage of the performance and design properties of C6-based products, and particularly those addressing solutions for a low-carbon future,” Mr Royall added.
Despite an improving business outlook, challenges remain. These include the lack of supply predictability and price volatility in benzene; costs of butadiene; regional ethylene issues; regional styrene and phenol supply issues; and health, safety and environment (HSE) concerns that will require close monitoring.