Demand for Benzole Increases Rapidly

By Li Yuanjie  

Stable output increase

The rapid development of the iron and steel industry in China
has promoted dramatic growth in the output of coke in recent
years. But with the impact of macro economic controls and
environmental protection, the 2006 output of coke was 281
million tons, an increase of 20.6% over 2005 - growth had slowed
down. Hebei province, Inner Mongolia, Shanxi province, Shandong
province and Xinjiang are all constructing or planning to
construct large coke plants with a capacity of over 2.0 million
t/a. The total capacity of projects under construction is around
150 million t/a. The rapid output increase of coke production
has created a reliable precondition for the development of
benzole production.
   According to statistics, the output of benzole in China was
960 thousand tons in 2004, 1.23 million tons in 2005 and 1.74
million tons in 2006. The annual growth of the benzole output
was more than 35% in 2005 and 2006, higher than that of coke
output. Benzole is mainly produced in large coking plants that
have a coke output of over 1.0 million tons a year. With the
completion of large coking plants and the increase of the benzole
yield, the output of benzole in China is expected to reach around
2.2 million tons in 2007, an increase of 26.4% over 2006.

Constant consumption growth

With the development of the market, the consumption of benzole
as a basic chemical raw material has grown constantly. Benzole
refining enterprises constructed in China are roughly
classified into two categories. The first category produces pure
benzene through the acid washing process. The second category
produces pure benzene through the benzene hydrogenation process.
The acid washing process features small investment, quick effect
and convenient construction of production units. Most refined
benzene units in China use this process. Benzene produced
through this process, however, has a low purity and chemicals
such as toluene and xylene cannot be effectively separated
either. The benzene hydrogenation process has large investment
and slow construction of production units. The process however
uses advanced technology, benzene produced through this process
has a high purity similar to petroleum benzene and chemicals such
as toluene and xylene can be effectively separated. The benzene
hydrogenation process therefore represents the development
orientation of benzole refining.
   The output of pure benzene produced through the acid washing
process was quite big in China in 2006. The consumption of
benzole was estimated to be around 950 thousand tons. China
Shenma Group Co., Ltd., Baosteel Chemical Co., Ltd. and
Shijiazhuang Coking Group are typical enterprises using the
benzene hydrogenation process to produce pure benzene. The
consumption of benzole in these enterprises was around 300
thousand tons in 2006. With the completion of more pure benzene
units using the benzene hydrogenation process, the consumption
of benzole will grow further in 2007.

Constant export increase

The constant oil price rise in the international market in recent
years has led to a considerable difference in production cost
between petroleum benzene using crude oil as raw material and
pure benzene from coking using the benzene hydrogenation process.
The production cost of deriving pure benzene from coking using
the benzene hydrogenation process was RMB2 000 per ton lower than
petroleum benzene in 2006. High profit has aroused greater
interest in the utilization of benzole resources. The exported
amount of benzole in China has increased constantly. The
exported amount of benzole in China reached 189.3 thousand tons
in 2006, an increase of 188% over 2005.
   The demand for benzole in downstream sectors has kept
increasing in recent years. The main reason for this is that pure
benzene, toluene and xylene produced by refining benzole can
partially replace petroleum-pure benzene, toluene and xylene,
and their production cost is relatively low. Such a status will
last for quite a few years in the future. The output of benzole
therefore can hardly meet the market demand during the Eleventh
Five-year Program period (2006-2010).

Sustained high price

The price of benzole is mainly influenced by the price of coal,
the market demand and the price of petroleum pure benzene. In
China petroleum pure benzene holds a dominant position in the
benzene market. The price of benzole has followed the price trend
of petroleum benzene for long years. Exceptions are only
temporary and do not last long.
   With the skyrocketing oil price in the international market
starting from 2004, the energy price in China increased
constantly. The price of benzole also had a dramatic rise. It
increased from RMB2 500 per ton to more than RMB5 000 per ton
in the first half of 2004 and reached over RMB6 000 per ton in
October 2004. After repeated ups and downs, the price of benzole
dropped considerably after April 2005 and was maintained at
around RMB3 500 per ton at the end of 2005 and at the beginning
of 2006. Starting from March 2006 the price of benzole increased
constantly with the price rise of petroleum pure benzene. It
increased to RMB5 300 per ton at the end of 2006.
   The price of benzole will stay high with little possibility
for a drastic drop during the Eleventh Five-year Program period.
Major factors for this are as follows: (1) The price rise of
non-renewable energies such as coal and crude oil will directly
lead to a cost increase of benzole to a certain extent; (2) In
spite of output growth, the market demand for benzole will have
a synchronous increase, oversupply is unlikely and the price
drop of benzole will be prevented; (3) The price of petroleum
benzene will be maintained at a high level with the oil price
rise and the price of coke-byproduct benzole will not likely drop
drastically.