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US bulk chemical exports to increase in 2016

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Hydrocarbon Engineering,

Despite low crude oil prices, new US shale gas-derived chemical expansions continue to move forward, and more than 100 million t of new capacity will be added in the US chemical industry by 2025. Much of that new capacity will be converted to plastics, significantly increasing the US net export position for these materials, according to new research from IHS.

Major US chemical production additions include ethylene, propylene, methanol, ammonia and their derivatives, such as plastics and fertiliser. New domestic fertiliser production will replace imports from South America, the Black Sea and the Middle East. The US shale gas impact on liquid bulk chemicals is less pronounced than for solids but still significant, according to the research, entitled IHS Chemical US Bulk Chemical Export Expansion Analysis.

Recent production additions have resulted in a 10 million t increase in bulk liquid chemicals in the last year, and by 2025, US bulk liquid chemical additions will expand by more than 25 million t, IHS Chemical said. The most notable bulk liquid chemical additions will be in methanol.

“Chemical producers are clearly looking to take advantage of continued low natural gas prices in the US, which is enabling the significant expansion of these methane-based projects,” said Chris Geisler, director, chemical consulting at IHS Chemical and author of the analysis. “With so many projects coming online, this phenomenal growth is changing the global trade landscape. Currently, the US is a major importer of methanol, but by 2018, the US will be a major net exporter of methanol, which is a significant shift for the US industry.”

The vast majority of new olefin chemical production will be converted to solid plastic resins and exported, according to the IHS analysis. With the exceptions of the ammonia and fertiliser production chains, the vast majority of expansion will be centered in Texas and Louisiana. Within Texas, firm capacity additions stretch from Beaumont to Corpus Christi, including several within the Houston Ship Channel (HSC).

Solid fertiliser and plastics trade will change substantially in the US, as well as bulk liquids trade for products such as caustic soda, methanol and ethylene glycol,” Geisler said. “This capacity expansion means there will be significant uptick in chemical trade activity and logistics considerations for not only producers and traders, but also the key ports, terminals and logistics providers, primarily on the Texas and Louisiana Gulf Coast,” he said “As these chemical products expand, we expect to see increased marine, rail and truck traffic, primarily in the US Gulf Coast, but possibly later, that activity will expand to several of the East and West Coast ports and terminals.”

“Base aromatics (benzene, toluene, xylenes) have not benefitted from the shale gas developments, but aromatic derivatives, particularly styrene, have benefitted,” said Peter Feng, Director of Aromatics at IHS Chemical. “Tight oil and shale gas have impacted the outlook for naphtha and octane, and unlike some of the other petrochemicals, there are only a limited number of expansion plans for North American aromatics.”

The impact on trade flows, Feng said, has been quite pronounced. “North America will be a growing net importer of benzene and the region has flipped from being a net exporter of toluene, mixed xylene and paraxylene, to a net importer. From a logistics perspective, this will be important as ships transporting shale-gas advantaged production like methanol out of the region, will need products to bring back into North America as well.”

Low US gas prices are driving lower electricity prices, the IHS report said, which will likely incentivise US operators in the chlor-alkali chain to increase operating rates in the near-term and to expand long term. This will result in more caustic soda production as a chlorine co-product.

MTBE (methyl tertiary-butyl ether), although no longer used in the US gasoline pool, is expected to see expanded export potential, IHS said. Finally, ethylene glycol production will increase in the longer term, moving the US from a net importer to a net exporter of this product. As other methanol, ethylene and propylene liquid derivatives are built, trade in bulk liquid chemicals will increase further, IHS said.

Through the study period of 2025, IHS Chemical expects capacity expansion in alpha olefins, ethoxylates, glycol ethers, MTBE, acetic acid and acrylic acid among others. IHS Chemical is expanding on its report on bulk liquid chemicals to include plastics and fertilisers. The new expanded study, the IHS Chemical US Chemical Industry Trade and Logistics in the Shale Gas Era Report,” will be available in second quarter 2016.

These market realities will also drive much of the conversation when major industry executives, along with other leading IHS experts, speak at the IHS Chemical 31st Annual World Petrochemical Conference (WPC) and Workshops, 15 – 18 March 2016, at the Hilton Americas Hotel in Houston, Texas.

Executives from Dow Chemical, ExxonMobil Chemical, Royal Vopak and Citigroup Global Markets Inc. will be featured speakers at the executive keynote panel session on 16 March 2016. They will discuss new investment opportunities, trends in the automotive business, and the impact on chemicals, supply chain and logistics, as well as the necessity to meet investor expectations in order to continue to drive company and shareholder success.

The IHS Chemical World Petrochemical Conference is recognised as a premier forum offering insights into the petrochemical industry’s future, will be held under the key theme of ‘Chemicals Enter New Frontiers Industry Innovates and Adjusts to Uncertainty in Energy and Economy’. The discussions will focus on the petrochemical industry’s new realities in light of the current energy environment caused by the dramatic fall in oil prices and energy market volatility. The gathering brings more than 1200 senior chemical industry decision makers from more than 40 countries to explore the new realities facing the petrochemical market, technologies and geopolitics.

Nariman Behravesh, Ph.D., IHS Chief Economist, and Jamie Webster, Senior Director at IHS Energy, will offer their views on the global economic and energy outlook, in light of recent oil price declines that set a new low not experienced since October 2004. These discussions will combine with economic concerns regarding the Chinese economy, impending Iranian oil production entering the market, and a strong US dollar.

Adapted from press release by Rosalie Starling

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