China's Styrene Production Capacity Set to Decline in 2024

In 2024, China is poised to witness a substantial decline in the growth of its styrene monomer capacity, marking a notable shift from the rapid expansion observed in the preceding years of 2020-2023, said Chemanalyst.

The industry landscape is undergoing a transformative phase, with the imminent launch of only two major plants this year – the Chambroad Petrochemical facility boasting a capacity of 600 thousand tons of styrene annually and the Luoyang Petrochemical plant with a capacity of 120 thousand tons per year.

Despite the deceleration in capacity growth, the sector is entering a period of heightened competition as it grapples with the challenge of establishing a dynamic equilibrium. The expansion of capacity no longer guarantees an increase in supply, especially given the backdrop of dwindling profitability and low utilization rates.

In 2023, China witnessed the commissioning of a total of 3.7 million tonnes of styrene capacity per year. This surge, coupled with escalating pressure on profit margins, resulted in an overall slump in the productivity of local styrene plants, plunging to a record low of 70-75% for the entire year. Several plants, particularly those with capacities below 300,000 tonnes per year, faced prolonged shutdowns, making low productivity a prevailing norm in certain facilities.

The repercussions of this capacity surge were evident in the inventories at eastern China's ports, which gradually dwindled to historic lows in the latter half of the year, sustaining that level for nearly four months. Forecasts for 2024 anticipate a continuation of low sales volumes, influenced by declining profitability and insufficient actual supply. In response to these market dynamics, most suppliers have been offering smaller discounts compared to the previous year when finalizing contracts for 2024.

Recognizing the challenging domestic landscape, some major producers situated in coastal regions are actively expanding their export activities as a strategic move to alleviate pressure from domestic competition. The intensification of China's capacity growth has reverberated globally, leading to the prolonged shutdowns of small factories within China over the past two years. Additionally, sizable facilities in South Korea have faced extended closures, and a number of factories in Europe have exited the market permanently.

In the face of increasing competition on the global stage, producers lacking a cost advantage find themselves under heightened pressures. The ongoing trend of competitive globalization is expected to persist into 2024, signalling a continuation of the process that may result in the phased-out production of those unable to navigate the challenges posed by this evolving industry landscape.

We remind, on December 23, Sinopec Qilu Petrochemical, a prominent subsidiary of the global energy and chemical giant Sinopec, made an unexpected decision to temporarily cease production at its styrene plant in Zibo, located in Shandong Province, China. This unforeseen shutdown is attributed to unscheduled maintenance activities, and the duration of this essential upkeep remains undisclosed. With an annual production capacity of 200,260 tons of styrene, the plant's hiatus raises questions about the impact on the supply chain and the timeframe for the resumption of operations.

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Iranian Revolutionary Guards launched rockets that malfunctioned and crashed into a petrochemical plant in Chabahar, southeast Iran during the Great Prophet 18 war games, said Hydrocarbonprocessing.

Social media videos captured workers fleeing as the rockets descended. Initial reports showed missile launches from the Oman Sea towards Sistan and Baluchestan province, with one hitting the Chabahar Petrochemical complex.

The Mehr News Agency attributed air defense activation sounds to Revolutionary Guards' naval exercises, with ongoing investigations.

Halvash website videos depicted multiple missile launches causing explosions and smoke in Chabahar. Eyewitnesses reported over five rockets fired, with two exploding mid-air and three hitting the petrochemical complex; no casualties were reported.

Chabahar's governor attributed the smoke to Revolutionary Guards' maneuvers, reassuring the public. The explosions caused fear and panic, audible throughout Chabahar.

In a separate incident, an attack on a police station in Rask, Sistan and Baluchestan province, resulted in a police officer's death; Jaish al-Adl claimed responsibility.

Last December, a fire at a crude oil distillation unit at a refinery in the central Iranian city of Isfahan injured four people, the official IRNA news agency reported. Two of the injured were firefighters, a senior official at Isfahan governorate said, adding that the fire had been extinguished, the semi-official Fars news agency reported. The official said pipes at the entrance of unit 3 of the refinery caught fire. He did not say what caused the pipes to catch fire.

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In January, Hanwha Solutions implemented a 10% reduction in the utilization of caustic soda production at its facility in Yeosu, South Korea, said Chemanalyst.

The decision was driven by commercial considerations, although the duration of this reduced production load has not been disclosed. The facility boasts a production capacity of 873 thousand tons of caustic soda annually.

The recent move follows Hanwha Solutions' temporary closure of polyvinyl chloride (PVC) production in Yeosu at the end of August for maintenance purposes. During this period, all production lines, collectively capable of producing 460 thousand tons of PVC per year, were temporarily shut down within a span of two weeks.

Hanwha Chemical, established in 1965 in South Korea, is the parent company overseeing these operations. As a pioneer in the country's chemical industry, Hanwha Chemical holds the distinction of being the first company to initiate the production of polyvinyl chloride, high-density polyethylene, linear polyethylene, and chlor-alkali products.

The reduction in caustic soda production utilization signals strategic adjustments within Hanwha Solutions, reflecting a response to market dynamics, commercial considerations, or other operational factors. While the specific reasons for the reduced production load remain undisclosed, such decisions are often influenced by factors such as market demand, economic conditions, or operational efficiency.

The temporary closure of PVC production in Yeosu in August, aimed at conducting repairs and maintenance, highlights Hanwha Solutions' commitment to ensuring the reliability and optimal performance of its production lines. Maintenance shutdowns are common in industrial settings, providing companies the opportunity to address equipment issues, implement upgrades, and maintain overall operational integrity.

Yeosu, South Korea, serves as a significant operational hub for Hanwha Solutions, contributing to the company's legacy as a key player in South Korea's chemical manufacturing landscape. The facility's diverse production capabilities, including the manufacturing of polyvinyl chloride, high-density polyethylene, linear polyethylene, and chlor-alkali products, underscore its strategic importance within Hanwha Chemical's overall portfolio.

Hanwha Chemical's establishment in 1965 further underscores its longstanding presence and contributions to South Korea's chemical industry. As the inaugural company in the country to venture into the production of polyvinyl chloride, high-density polyethylene, linear polyethylene, and chlor-alkali products, Hanwha Chemical has played a pivotal role in shaping and advancing the chemical manufacturing sector in South Korea.

Hanwha Solutions' decision to reduce the utilization of caustic soda production in Yeosu aligns with strategic considerations for commercial purposes. The temporary closure of PVC production earlier in August for maintenance further demonstrates the company's commitment to ensuring operational efficiency and reliability. Hanwha Chemical's historical significance as a trailblazer in South Korea's chemical industry highlights the enduring impact and contributions of the company to the country's industrial landscape.

We remind, LG Chem, a leading petrochemical company in South Korea, has announced plans to halt operations at its caustic soda production line in Yeosu, South Korea. Scheduled for the 20th of February, this shutdown is part of a routine maintenance strategy. The affected production line has an annual capacity of 320,000 tons of caustic soda, contributing significantly to LG Chem's total annual capacity of 728,000 tons.

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TotalEnergies, a globally recognized energy corporation, recently announced a delay in the reboot of its mixed-feed ethylene cracker facility situated in Antwerp, Belgium, said Chemanalyst.

This facility, which boasts an annual production capacity of 580,000 metric tons, has had its restart schedule pushed to the second half of January, a move that signifies the intricate challenges inherent in such large-scale operations.

The cracker was initially taken offline in October, with the initial projection being that the turnaround would span a period of approximately eight weeks. However, the resumption of operations at the facility has been postponed, thereby prolonging the period of inactivity at the site.

In the preceding month of September, TotalEnergies had laid out plans for a substantial overhaul of two out of the three sites in Antwerp. The scheduled maintenance was set to run until the early days of December 2023. The company had also given a heads-up about potential flaring activities at the refinery from September 25th onwards, as stated in a company-issued announcement during that same month.

As part of the maintenance work at its polymer site located at Scheldelaan 2-4 in Antwerp, TotalEnergies expressed its intention to invest an additional €3 million ($3 million). This proposed investment is a testament to the company's dedication to maintaining the integrity of its infrastructure and ensuring the uninterrupted operation of its facilities.

In addition to the postponed cracker, TotalEnergies operates another standalone cracker within Antwerp. This second facility has an ethylene production capacity of 570,000 metric tons per annum, a fact that further consolidates TotalEnergies' robust presence within the region of Antwerp.

The Antwerp complex is renowned for its versatility and its ability to produce a diverse array of products. Based on information provided on TotalEnergies' official website, the complex is capable of manufacturing fuel oil, gasoline, liquid petroleum gas, diesel, and jet fuel. Furthermore, the complex also has the capacity to produce other products such as propylene and aromatics.

The delay in the restart of the Antwerp cracker is indicative of the intricate challenges and complexities that could arise in the operation and maintenance of large-scale facilities. However, TotalEnergies' demonstrated commitment to investing in maintenance and ensuring the successful operation of its facilities is a clear indication of the company's dedication to fulfilling its production capabilities.

While the delay in the restart of the Antwerp cracker constitutes a significant development, TotalEnergies' planned investment and commitment to maintenance is expected to be beneficial for the future operations of the facility. The Antwerp complex continues to play a vital role in TotalEnergies' global operations, making a considerable contribution to its diverse range of product offerings.

This decision by TotalEnergies to delay the restart of the Antwerp cracker serves as a reminder of the many factors that can influence the operation of such facilities. These factors can include everything from technical issues to changes in market conditions or regulatory requirements. However, it also underscores the importance of being prepared to adapt and respond to these challenges in order to ensure the continued success and viability of these operations.

We remind, NextDecade has filed for a shelf registration that would allow TotalEnergies to sell its 17.5% stake in the U.S. LNG company over time. A unit of French oil major TotalEnergies currently holds 44.9 million shares of NextDecade, bought for $219 million in June as part of a broader deal to develop NextDecade's Rio Grande LNG export project in south Texas that has faced repeated delays.

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Borouge Plc announced the signing of a $44-MM agreement with NAFFCO to supply NAFFCO’s local and regional infrastructure projects with Borouge’s innovative and sustainable polyethylene materials, said Hydrocarbonprocessing.

Hazeem Sultan Al Suwaidi, Chief Executive Officer of Borouge, said: “Our partnership with NAFFCO underscores how Borouge is leveraging its advanced polyolefin technology to enhance mega projects and support the UAE's economic diversification and industrial growth. The two-year agreement will supply NAFFCO with Borouge’s innovative polyethylene solutions to enable local and regional megaprojects. We are proud to be contributing to the nation’s economic landscape and demonstrating that locally manufactured products are synonymous with global excellence."

Renowned for their corrosion and chemical resistance, pressure pipes made from PE100 can withstand extreme industrial conditions, ranging from high levels of impact to abrasions and stress cracking. In addition, the pipes are notable for their long-term pressure resistance, making them some of the most efficient and dependable solutions in the market.

Ahmed Khalid Al Khatib, Group Managing Director of NAFFCO, said: “Partnering with Borouge allows us to enhance our offering to ever-growing markets such as the UAE. It is important to have a collaboration with a strong partner such as Borouge to cater to the needs of various infrastructure developments. NAFFCO’s commitment to innovation and sustainability, particularly in producing high-quality, ‘Made In UAE’ pipes, aligns with the mission of providing the best in fire safety. This collaboration underlines our commitment to leading the industry, driving innovation, and positioning the UAE at the forefront of fire safety technology.”

Under the two-year agreement, Borouge will provide advanced infrastructure solutions to NAFFCO for various infrastructure projects across the region, including the Guggenheim Museum, the Riyadh city project, Mohammad Bin Zayed City, the Yas Island Development Project, the Dubai Hills Project, Heat of Europe Island, and Etihad Water and Electricity projects.

We remind, Borouge Plc, a leading petrochemical company that provides innovative and differentiated polyolefin solutions, announced that it has signed a Memorandum of Understanding with National Petroleum Construction Company, a UAE-based Engineering, Procurement and Construction Company.

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