World's Largest Propylene Oxide Plant Finishes Start-up Phase

06 Mar 2009 • by Natalie Aster

Petrochemicals majors Dow and BASF's joint venture propylene oxide production plant in Antwerp, Belgium, has completed its start-up phase, the companies announced in a press release on Thursday.

With a production capacity of 300,000 mt/year, the new Antwerp unit is the world's largest commercial scale propylene oxide plant, and is expected to consume between 250-300,000 mt/year of propylene.

It uses HPPO production technology, developed by BASF and Dow, converting hydrogen peroxide and propylene to propylene oxide. This method of production means that co-products are avoided and nothing but the end-product propylene oxide and water are generated. Plants using this process have a smaller footprint, need less infrastructure and require a significantly lower investment compared with conventional PO production processes, a company source at BASF explained at an industry event in September 2008.

Propylene oxide is a core feedstock for polyurethane, used in many applications including largely the recently besieged automotive industry. The unit will be of particular interest to propylene producers in Northwest Europe, not least to fellow European propylene oxide producer LyondellBasell.

Propylene producers have seen a lull in demand from derivative polypropylene markets through Q3 and Q4 2008, due to a dramatic and sustained downturn in end-user demand.

This led a number of European cracker operators to reduce olefins output by as much as 40% by the end of 2008. Global demand for petrochemicals is still experiencing a slow and staggered rate of return to normal conditions following the economic slowdown seen in Q4 2008.

Spot polymer grade propylene prices actually hit an all-time low of Eur335/mt FD NWE December 12, 2008, recovering marginally almost a month later, to Eur405/mt FD NWE on January 9, 2009 according to Platts data.

The average production rate of crackers in Northwest Europe only actually returned cautiously by 20-30% in March 2009. Propylene producers still currently face a limited number of outlets to supply propylene to as derivative business performance and a lack of arbitrage opportunities fails to show reliable support.

With such an air of uncertainty hanging over the state of end user petrochemical demand, market participants could therefore be expected to ask how Dow and BASF planned to make a new production facility profitable under such conditions.

"Its advanced technology and world-scale capacity secures a cost leadership position for both companies," Jacques Delmoitez, President of BASF's polyurethanes division said.

Source: Platts