Changes of Export Strategy
As certain products such as paraxylene (PX) are oversupplied these days, petrochemical companies are rapidly shifting their export strategies. Some companies stopped producing PX, and others greatly increased exports of benzene among aromatics (benzene, toluene and xylene) products.
According to the industry on August 3, S-Oil and Samsung Total Petrochemicals increased sales of benzene to the US.
S-Oil increased sales of mixed xylene (MX) and benzene as the price of PX declined during the second quarter. It was more profitable to sell benzene or MX than to produce PX from naphtha and sell it. S-Oil downscaled the sales portion of PX by 6 percentage points to 53 percent from the existing 59 percent, increased the portion of benzene, relatively profitable, by 5 percentage points to 24 percent from the existing 19 percent. S-Oil also increased the MX portion to 6 percent from 3 percent.
Samsung Total Petrochemicals is focusing on supplying benzene from the beginning of this year as well, since the U.S., the origin of shale gas, has become a rising consumer of benzene. Due to the shale gas boom, the American petrochemical companies changed their naphtha cracking center (NCC), processing crude oil, to an ethane cracking center (ECC), processing shale gas.
As demand from the U.S. surges, the average monthly price of benzene swelled as well. According to market research company Platts, the price of benzene was US$1,300 per ton in May, but increased to US$1,455 in June and finally to US$1,494 last month.
Benzene exports from Korea to the U.S. also jumped. According to the Korea International Trade Association, exports of benzene by Korean companies increased to US$513,269,000 during the first half this year, compared to US$307,526,000 during the same period last year, an increase of more than US$200 million.
In general, most Asian petrochemicals companies have NCC and NCCs that produce a lot of aromatics products structurally. Fifty percent of products are olefin products, including ethylene and propylene, and 20 percent are aromatics compounds.
In contrast, ECCs, based on shale gas feedstock, have lower production costs, but do not produce aromatics that much. 80 percent of products are ethylene, and 5 percent are propylene and aromatics compounds.
A refining company employee said, “As American petrochemical companies are increasing shale gas feeding cracking facilities, aromatics products are short of supplies. In the case of PX, production volume is quite balanced due to its oversupply. However, companies are competitively supplying benzene, since it is in serious shortage in the US market.”