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Polypropylene
AtoFina
Petrochemicals, formerly Fina Oil and Chemical Company, is a subsidiary of
AtoFina, which was formed in 2000 by the merger of Elf Atochem with TotalFina. ALON
USA acquired ownership of the Big Spring, Texas refinery in August 2000, when
ALON Israel Oil Company Ltd. purchased FINA Oil and Chemical Company's U.S.
fuels marketing and refining assets. Clark
Refining Holdings changed its name to Premcor Inc. In October 2002, the company
closed its Hartford, Ill. refinery and eliminated 100 million pounds of
propylene capacity. Earlier
this year, Dow Chemical Company permanently closed its Seadrift, Tex., and Texas
City, Tex., crackers, eliminating 40 and 150 million pounds of capacity,
respectively. Los
Angeles Refining Company is a spin-off of Texaco Refining and Marketing. Equilon
Enterprises sold its Wood River Refinery in Roxana, Ill.l., to Tosco Corporation
in June 2000. The site has 250 million pounds or propylene capacity. Then in
September 2001, Phillips Petroleum Company acquired Tosco Corporation. In
addition to the Roxana, Ill. property, another refinery in Linden, N.J. with 400
million pounds of propylene capacity was gained with the Tosco acquisition.
Phillips later merged with Conoco, in August 2002, to become ConocoPhillips. Baton
Rouge Propylene Concentrator in Port Allen, La. is owned and operated through a
joint venture between ExxonMobil (70 percent) and Enterprise Products Partners
(30 percent). This new unit was commissioned in 2000. In
2002, Enterprise Products Partners purchased the equity shares (66.7 percent
ownership) of D-K Diamond Koch, Diamond-Koch and Diamond-Koch III, which are
jointly owned by affiliates of Valero Energy Corporation and Koch Industries, in
the propylene fractionation facility located in Mont Belvieu, Tex. The
facility is operated by Koch Hydrocarbon Southwest. Javelina
Company is a joint venture, which is 40 percent owned by El Paso Corporation, 40
percent owned by Kerr-McGee and 20 percent owned by Valero Energy. The company
recovers propylene from refinery gas streams provided by local refineries. El
Paso Corporation purchased Coastal Corporation in 2001, gaining refineries in
Westville, N.J. and Corpus Christi, Tex. In 2003 El Paso sold these, Westville
with 60 million pounds of propylene capacity going to Sunoco, and Corpus Christi
with 100 million pounds of capacity going to Valero Energy. Flint
Hills Resources is a wholly owned subsidiary of Koch Industries. Williams
Olefins operates the 100 million pound capacity propylene unit in Geismar, La.
The joint venture company is owned by The Williams Companies, BASF and GE. Profile
last published 1/31/00; this revision 10/6/03. DEMAND 2001:
36,718 million pounds; 2002: 41,143 million pounds; 2006: 50,000 million pounds,
projected. Demand equals production plus imports (2001: 7,947 million pounds;
2002: 10,136 million pounds) less exports (2001: 275 million pounds; 2002: 793
million pounds). GROWTH Historical
(1997 - 2002): 6.3 percent per year; future: 5.0 percent per year through 2006. PRICE Historical
(1997 - 2002): High, ˘27.5 per pound, polymer grade, del. Gulf Coast; ˘26.0
per pound, chemical grade, same basis; low, ˘12.0 per pound, polymer grade,
same basis; ˘10.5 per pound, chemical grade, same basis. Current: ˘21.5 per
pound, polymer grade, same basis; ˘20.0 per pound, chemical grade, same basis. USES Polypropylene,
50 percent; acrylonitrile, 10 percent; propylene oxide, 10 percent; cumene, 8
percent; oxo-alcohols, 7 percent; isopropanol, 3 percent; oligomers, 4 percent;
acrylic acid, 5 percent; miscellaneous, including EP elastomers 3 percent. STRENGTH The
major propylene derivatives are enjoying healthy markets. Especially
polypropylene, which is 50 percent of propylene’s take. Polypropylene demand
remains solid, fueled in part by substitution for HDPE (high density
polyethylene) and ABS (acrylonitrile-butadiene-styrene) resins on a
cost-performance basis. Growth is particularly strong the automotive sector,
which is a huge and growing market for plastics. Here the drivers are improved
performance and reduced weight by substituting for metal. In some applications,
polypropylene has been replacing polyurethane and other plastics because of its
ability to be recycled. Polypropylene demand will continue to grow at about two
times GDP because for favorable cost and balance of properties, compared with
other materials. WEAKNESS On
the supply side, feed-flexible steam crackers have been converting to lighter
feed slates, which results in less available propylene. A strong alkylation
value in relation to chemical-grade propylene means refiners are less inclined
to divert propylene from the gasoline pool. Crackers with the option are
switching feedstocks from heavies to lights as the effective feed costs are
about break-even now – comparing oil (naptha) to natural gas costs. There is
not much advantage to either feed choice, except lighter feeds are easier to
run. The switch from naphtha to lighter feed slates such as ethane, however,
means significantly less propylene is available. The
supply side shortage has been accommodated by increased imported material.
Propylene imports have grown from under 4 billion pounds in 1997, to over 10
billion pounds in 2002 – an annual growth rate of 20 percent. OUTLOOK The
US olefins market continues in a prolonged trough, begun in 1997, where
operating rates have hovered around 80 percent due to the economics of producing
ethylene in this economy. Propylene is a by-product of ethylene production and
also a by-product of gasoline from FCC units. Industry watchers are estimating
the recovery in this sector to occur in the 2006-2008 time frame. Meanwhile,
there is an increasing gap between propylene demand growing at an average 5
percent per year and the supply from ethylene crackers and refineries. Propylene
produced from steam crackers will not be able to keep pace with growth in
propylene demand for petrochemicals. Since ethylene is the primary product from
steam crackers, new steam crackers are only built to meet growth in ethylene
demand. World propylene demand has consistently outpaced ethylene demand over
the past 10 years and this scenario is expected to continue for at least another
10 years. Propylene
from FCC units is also not able to keep pace with propylene demand from
petrochemicals. Similar to ethylene, world propylene demand has consistently
outpaced gasoline and distillates over the past 10 years and is expected to
continue for the next 10. Dedicated
propylene units may eventually serve a significant portion of propylene
requirements. Today, stand-alone production units for propylene (there are none
in the US) can produce just 2,400 million pounds, or 2 percent of current world
supplies. That could increase to 10,000 million pounds, 6 percent, by 2010.
Several methods of stand-alone propylene production are currently available
including deep catalytic cracking, propane dehydrogenation, metathesis, olefins
cracking technologies and methanol to olefins. HISTORICAL DATA
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