It was only recently that industry projects showed 10% of all propylene production coming from on-purpose dehydrogenation based technologies by 2012. With the recent declines in propylene markets, this projection may need to be re-evaluated if propylene margins remain lower than expected.
At the beginning of this summer, European propylene contracts had settled at around 45 euros/ton (or about US$64/ton). However, it is expected that the underlying demand going into the third quarter of 2009 will be weak and will result in a particularly difficult third quarter, particularly for naphtha-based propylene producers, such as many of those in Europe. This could possibly lead to plant shutdowns in August. With naphtha feedstock costs having increased, the ensuing propylene price rise would make it difficult for European propylene producers to export propylene derivatives, such as polypropylene, to Asian markets.
Although most propylene production has been produced as a co-product of ethylene production in world-scale steam crackers, such as the new ones in the Middle East, and as a byproduct from refinery fluid catalytic converter (FCC) operations, it was projected in 2008 that significant on-purpose propylene production capacity would be needed by 2012. However, the economic performance of the petrochemical industry has deteriorated sharply over the last year, following curtailed demand from the frail global economy.
The second quarter of 2009 saw industry performance stabilize, with a modest increase in volumes as demand in some industry sectors and regions (most notably Asia) picked up. However little improvement to profitability was achieved, as crude oil prices rallied and lengthy markets prevented producers from fully passing costs through to consumers. Demand for petrochemicals varied quite considerably across geographic markets in the second quarter.
Therefore, previous industry projections that on-purpose propylene production (i.e., propane dehydrogenation) would need to increase so that at least 10% of global propylene production would be from on-purpose propylene production may need to be reconsidered. Currently, 3% of all of the world’s propylene production is based on propane dehydrogenation. In fact, much of the required increases in propylene production, if they remain modest, can be met by revamping existing FCC units to increase propylene production over fuels production. – Rene Gonzalez