Mike Boswell aka @polymerman discusses the challenges faced by European polypropylene producers due to declining propylene feedstock availability from traditional sources. He explores alternative propylene production technologies and their potential impact on the European polypropylene market.
As a result of reduced cracking of Naphtha for ethylene, coupled with lower demand for petrol for passenger vehicles, European polypropylene producers may need to look for alternative feedstock sources.
The increased penetration of US polyethylene into the European market is reducing demand for polyethylene produced from the oil refining derivative Naphtha here in Europe. US polyethylene is produced from ethane, which is derived from Shale Gas where the economics are highly competitive and polyethylene granules can be readily exported. The process of cracking Naphtha primarily results in the production of ethylene, from which propylene and other feedstocks are by-products. The ratio of ethylene to propylene can only be adjusted within a narrow tolerance with ethylene remaining the majority. The FCC (Fluidised Catalytic Cracker) process of refining petrol for automotive fuel also results in the production of propylene, however, the increased penetration of EVs in Europe is quelling demand for petrol and in turn restricting PP feedstock availability.
In order to address any imbalance in propylene availability, On-Purpose Production Technologies are available that only produce propylene feedstock. So far, the following technologies have been commercialised:
Propane dehydrogenation (PDH)
In the PDH process, propane gas is directly converted into propylene and hydrogen. This is a highly efficient process that enables a direct and cost-effective route to propylene.
Feedstock = Propane
Metathesis
Involves the rearrangement of ethylene and butenes to produce propylene.
Feedstock = Ethylene & Butenes derived from the Naphtha Cracking process.
PDH Process: Propane > Propylene
Metathesis Process: Crude Oil > Naphtha > Propylene
The point of differentiation between these processes is feedstock. Providing that propane can be accessed easily and economically then the relatively lower cost of a PDH unit compared to a Naphtha Cracker and a Metathesis Plant will lead to lower costs. However, the Metathesis approach can effectively shift the output dynamics of the Naphtha Cracking process towards the relatively higher demand for propylene. It should also be noted that propylene is not the only co-product of Naphtha cracking and that the capability of these other products to contribute to the Naphtha cracking process economics may be significant.
So far, not much is happening in Europe in terms of on-purpose propylene, apart from Grupo Azoty which is currently commissioning a PDH plant in Poland to supply a new PP plant. The limited investment in Metathesis plants suggests that the economics of this approach are currently less favourable. However, this approach is a good solution where a structural imbalance between ethylene and propylene exists.
The concern for European PP converters will be the continued access to the diversified range of PP grades produced here in Europe, which may become restricted if local PP capacity is shuttered and more reliance is placed upon imports. In particular higher flow and high impact strength PPCP for packaging and automotive applications may become more difficult to source. From an economic perspective increased feedstock costs are likely to be passed through in terms of higher polymer costs and this is most likely to apply to the more specialist grades, where the impact of imports is likely to be more restricted.