Cracking C9—— Demand Increases and Prices Decrease Slightly - China Reports

By Peng Yuhong, Tianjin PetroChemical Operation & Planning Department

Cracking C9 is a by-product of the naphtha steam cracking ethylene process, and is mainly used in the production of the two-stage hydrogenated C9 components, C9 thermal poly petroleum resin, refined dicyclopentadiene, etc. The two-stage hydrogenated C9 components are raw materials of gasoline, and the by-products of the process can at the meantime be applied to produce diesel and 180# fuel oil. The C9 thermal poly petroleum resin can be used for producing paint, low-end hot melt adhesives and rubber adhesives, and the bottom materials of the reactor are also feedstock of 180# fuel oil and coumarone resin. The refined dicyclopentadiene is used for the production of pesticides, pharmaceutical intermediates and ENB.

Supply

In 2019, the total domestic supply of cracking C9 for industrial use was 1.672 million tons, an increase of 74 000 tons compared with the previous year, up 5.76%. The overall operating rates of the downstream two-stage hydrogenated C9 components and C9 thermal polymerized petroleum resin plants were 71.71% and 63.9% respectively, with short supply of raw materials. Therefore, the supply of industrial cracking C9 was still tight. The capacity of China’s industrial cracking C9 in 2019 is shown in Table 1.

In 2020, Zhejiang Petrochemical and other producers successively launched commercial operation of their naphtha steam cracking ethylene plants, leaving the theoretical capacity increasing significantly. However, under the influence of the intensified trend of lightweight cracking raw materials, the yield of industrial cracking C9 is decreasing. The designed capacity is estimated to increase by 205 kt/a to a total of 2.369 million t/a. The statistics of China's new cracking C9 capacities in 2020 are shown in Table 2.

Demand

   China’s production of cracking C9 for industrial use is expected to increase to 1.7382 million tons in 2020, and the downstream demand will increase accordingly. Meanwhile, the capacity of the two-stage hydrogenated C9 components will increase to 1.74 million t/a. Therefore, most of the C9 will still be used for producing the two-stage hydrogenated C9 component. However, due to the negative factors such as limited gasoline demand, the growth rate of two-stage hydrogenated C9 components’ raw materials demand ratio is expected to be only 1.28%.
   The traditional downstream demand of C9 thermal polymerized petroleum resin is weak, but as the prices of C9 may decrease on the supply increases, the thermal polymerized resin manufacturers may be more enthusiastic in production, leaving its raw material demand proportion rise slightly by 1.20% to 16.68%.
   There is no substantial support for refined dicyclopentadiene, hence no significant change in the demand for cracking C9. However, due to the reduction of the heavy components of cracking C9 under the influence of the lightening of the cracking raw materials, the by-products of the two-stage hydrogenated C9 components and C9 thermal polymerized petroleum resin are expected to drop to 10%.

Market prices

   In 2019, the domestic cracking C9 market prices fluctuated downward. However, the supply was still tight, and the market fundamentals remained stable generally.
   In 2020, several naphtha steam cracking ethylene plants were put into production. However, under the influence of factors such as the raw materials lightening, the theoretical yield of cracking C9 has been reduced, coupled with the maintenance of many units, leading to a tight supply situation. The imbalance between supply and demand in the gasoline market has intensified. The prices of the two-stage hydrogenated C9 components continued to fall, the development of the paint and coatings market, under the pressure of environmental protection policy, was restricted, and the quality of C9 thermal polymerized petroleum resin remained low. The market prices will keep declining, dragging down the prices of cracking C9.
   It is expected that China’s cracking C9 market prices will continue to fall slightly in 2020. The low-end prices will be in the range of RMB3 300-3 500/t, and the high-end at RMB3 800-4 000/t. During 2021 to 2022, the negative factors for the cracking C9 market will be more obvious, hence the low-end prices will drop to RMB3 000-3 300/t, and the high-end to RMB3 600-3 900/t. However, it is possible that some refineries would keep C9 for captive use instead of selling, which will in turn support the market to some extent.