Why Europe's Chemical Industry Needs new Technologies
The preponderance of ethane in the American chemical industry is nothing new. Two-thirds of crackers in Europe are naphtha-fed, whereas light feedstock, which has always had cost advantages, has traditionally been the feedstock of choice in the American cracker industry. Ethane-based crackers are significantly more economical than their naphtha counterparts for a number of reasons.
The feedstock is cheaper and the investment and operating costs are lower. Because the constituents are nearly 80 % ethylene and the C2, C3, C4 and aromatics fraction is much lower, the cost of separation is nowhere near as high as with naphtha crackers.
Cheap natural gas is bringing feedstock prices down to bargain-basement levels, and that translates to lower costs for American ethylene producers. In its most recent market study, Ceresana Research reported that ethane-based production of ethylene has a distinct cost advantage. Ceresana figures show that the cash costs (fixed, variable and feedstock costs minus profits generated from by-products) were roughly two-thirds lower in Q3 2013 compared to naphtha-fed production.
The feedstock costs are just one side of the coin, however. The product mix resulting from the use of light feedstock has an effect which is almost even more dramatic. The imbalance in the ethylene/propylene mix which already exists in naphtha crackers shifts even further in the direction of ethylene. In addition, the proportion of butadiene and C4 drops to 2 % and 1 %. That could potentially lead to a glut of cheap ethylene and a bigger shortage of the cracker by-products propylene and butadiene.
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