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It is expected that demand for naphtha in Asia will exceed its supply capacity in the coming years. With the acceleration of the pace of development of the petrochemical industry, the use of LPG as an alternative raw material will have great appeal.
A senior consultant at consultancy Nexant said that Asian petrochemical producers will still use naphtha as their main raw material, but they will also have the opportunity to use LPG. Due to the addition of petrochemical cracking capacity, coupled with increased demand from end-users in the plastics and textiles sector, it is expected that demand for naphtha will continue to increase in the production of petrochemicals in the next five years. A consultant from the Purvin & Gertz Singapore company analyzed that some Asian petrochemical manufacturers have found that the continued use of some LPG in cracker feedstocks to produce basic petrochemicals (such as propylene) is more profitable.
PetroChina and Formosa Petrochemical in Taiwan, China, said that their cracker will still use LPG as a raw material. The switch to LPG was mainly driven by the increase in Asian naphtha prices. Earlier this year, ordinary naphtha prices reached a record high of about $740/tonne (Japan, cost plus freight). Other cracker manufacturers in Korea and Japan also use LPG as raw materials.
Purvin & Gertz predicts that by 2010 global LPG supply is expected to increase by 20% to reach 273 million tons. According to reports, the price of LPG (especially butane) is 11%-13% lower than the average price of naphtha this year. This spread makes some petrochemical companies that are overly dependent on naphtha consider making a choice, especially the new petrochemical under construction. The device should consider the diversification of raw materials. Japanese Showa Denko and Mitsui Chemicals plan to increase the use of non-naphtha raw materials, so that non-naphtha raw materials account for 30% to 50% of the total demand for raw materials.
Asia chooses liquefied gas as raw material for cracking
Industry experts recently predicted that the supply of naphtha in Asia will continue to be in short supply in the next few years, which will prompt petrochemical manufacturers in the region to use liquefied petroleum gas (LPG) as ethylene cracking raw materials. Because LPG is relatively cheap, manufacturers can obtain higher profits by reducing raw material costs.