European chemical profile: Ethylene oxide

USES
Ethylene oxide (EO) is primarily used as an intermediate. About 65% of global output is converted to monoethylene glycol (MEG) for polyester fibers, resins and antifreeze formulations, while more than 7% is used in diethylene glycol (DEG) and triethylene glycol (TEG).

The second-largest use is alkoxylates and ethoxylates for detergents. Other derivatives include ethanolamines, polyethylene (PE)/polyalkylene glycols, polyols, and glycol ethers. EO is also used as a fumigant, disinfectant and sterilant for medical products.

SUPPLY/DEMAND
Demand was very robust in 2010 and much better than expected, both for captive use in MEG, and in EO derivatives (EODs), particularly surfactants. Supply is now finely balanced after tightening mid-2010 from planned and unplanned outages.

The MEG market was expected to be overwhelmed in 2010 by new capacities in the Middle East and Asia, but a very strong Asian market has absorbed the extra output.

In Europe, plant closures have left it tight to short of EO with utilization rates now high at 85-90%. One producer said security of supply is becoming increasingly important.

US producer Dow Chemical closed its 320,000 tonne/year plant at Wilton, UK, on January 18, 2010, citing unfavorable profit margins. Slovakian producer Slovnaft shut its EO and glycols plants at Bratislava on October 1, 2010. The plant produced 14,000 tonnes/year of EO.

Production at Lukoil’s plants in Burgas, Bulgaria, also stopped in 2009 because of poor market conditions. Players believe it is unlikely the mothballed units will restart.

PRICES
Formula-related contracts for December settled at €1,137-1,182/tonne ($1,534-1,595/tonne), up €22/tonne on November. The formula level increase in January is €86/tonne, based on 82% of ethylene’s increase of €105/tonne, but freely negotiated business was still being discussed.

EO producers are pushing for hikes of €25-100/tonne above the formula pass-through level, citing the need to recover margins. Some customers were resisting these hikes, saying that it would be difficult to pass on ­anything downstream above the formula-­related increase.

TECHNOLOGY
Global production is based on the direct oxidation of ethylene via air or oxygen, with oxygen generally preferred in larger plants as it gives higher yields and less downtime.

Ethylene and oxygen are passed over a silver oxide catalyst at 200-300˚C (392-572˚F) and 10-30 bar. The gases from the reactor are cooled and passed through a scrubber, where the EO is absorbed as a dilute aqueous solution. The EO then goes to glycol manufacture or to be purified for use in EODs.

OUTLOOK
Global demand is forecast to grow at an average rate of about 5-6%/year, led by Asia and still driven by its two largest end-uses, MEG and detergents. Rapid growth is also tipped for ethanolamines. There is a growing trend to focus on EODs in the coming years as MEG margins come under increasing pressure from global overcapacity.

In Europe, demand growth will remain in line with GDP. No new capacity is planned in Europe, although players expect future ­investment in expanding high-purity EO ­production.

New projects are concentrated in Asia, particularly China, and the Middle East. Germany’s BASF is expanding EO output at its BASF-YPC joint-venture complex in Nanjing, China. The extra capacity is due to come on stream in the second half of 2011.

UK-headquartered Shell Chemicals is in advanced planning for a worldscale, high-purity EO plant on Jurong Island, Singapore.

Profile last published June 23, 2008

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