IHS Engineering360 – Yours truly, Yasmin

Synthetic Rubber Markets Enjoy a Bounce from Low Oil Prices

Originally published 15 December 2015 on IHS Engineering360.

The main use of natural and synthetic rubber is for tire manufacturing. Globally, 70% of all elastomers (natural and synthetic) are consumed for tire and tire products manufacture, says Emanuel Ormonde, IHS Chemical consultant. Approximately, seven gallons of oil are used to produce enough synthetic rubber to make a tire, according to the Rubber Manufacturers Association. Recent lower energy prices result in lower costs for synthetic rubber manufacturers and higher demand as motorists drive more.

Two main areas exist where tire producers could benefit from lower oil prices, says Bill Hyde, senior director of olefins & elastomers at IHS Chemical. On the demand side, if miles driven increase, as they have in the U.S. this year, then tire wear also should increase. “We have not seen significant change in tire demand yet, but it stands to reason that it will happen, at least eventually,” he says. On the supply side, raw material prices have dropped, which has been helpful for tire producers, he says.

One difficulty, however, is that rubber producers can’t fully enjoy the decrease in raw material prices because their sales prices have fallen. What’s more, the synthetic rubber market is plagued by surplus capacity and weak natural rubber market dynamics.

Globally, tire markets are seeing diverse trends. In North America and Western Europe demand is relatively stable. In China, the tire market is something of a disappointment. “The economic conditions there have put significant pressure on the automotive and tire markets,” says Hyde. Furthermore, demand focused on the original equipment (OE) market is growing, but sales into the replacement tire market are disappointing.

Methanol to Gasoline: A Novel Technology Challenged by Low Oil Prices

Originally published 27 August 2015 on IHS Engineering360.

Providing an alternative route for crude-oil-based gasoline, methanol-to-gasoline processes can produce gasoline via methanol using coal, natural gas or biomass feedstocks. This technology is of importance in regions with large quantities of low-priced coal or natural gas.

Global methanol demand has increased significantly in recent years, according to a November 2014 special report from IHS Chemicals that dealt with methanol-into-fuels applications. In a span of 15 years (2009-2024), IHS Chemical forecasts that the total methanol capacity will have more than doubled from 70 to 160 million metric tons. Similarly, demand for methanol is expected to reach 110 million metric tons in 2024.

Today, three processes exist that directly use methanol as a feedstock or intermediate for fuel production: ExxonMobil’s methanol-to-gasoline (MTG), Haldor Topsoe’s improved gasoline synthesis (TIGAS) and Primus Green Energy’s syngas-to-gasoline-plus (STG+).

Gasoline produced via these processes can be directly used in transportation vehicles as a drop-in fuel, or blended with gasoline product from refineries.

“Currently, most synthetic gasoline is probably produced in China based on methanol which uses coal as feedstock,” says Henrik Udesen, business development manager (TIGAS) at Haldor Topsoe. Even with today’s lower oil prices, interest remains in converting natural gas into gasoline, especially in locations where gas may be difficult to transport or where there is no local refinery to produce gasoline.

“There is a relatively direct correlation between crude and gasoline,” says Olivier Maronneaud, senior research analyst at IHS Chemical. “The spread between crude and natural gas, crude and methanol or crude to coal will have a direct impact on the economics for these methanol-based technologies and their development.”

Ammonia Production Set to Grow with Food Demand

Originally published 30 June 2015 on IHS Engineering360.

Ammonia is the basic building block of nitrogen fertilizers, one of the most widely used agricultural fertilizers in the world.

Global population roughly doubled from approximately 3 billion in the early 1960s to around 6 billion at the turn of the 21st century. Between now and 2050, population is expected to grow by another 3 billion, according to the United Nations.

Feeding such a population will involve a combination of advancements, including relying on increased plant nutrition, introducing new technologies and cultivating more marginal land. As a result, ammonia’s role in food production is likely to grow in importance.

“Demand for fertilizers, the majority of which are ammonia based is driven by the need for food, which in turn is driven by the size and wealth of the population,” says Bala Suresh, senior consultant and director of IHS Chemical.

In recent years, a number of improvements have occurred in ammonia manufacturing processes that both increased energy efficiency and reduced operating costs. These production gains are being achieved through development and implementation of better process conditions and more efficient equipment design. In the past decade, ammonia process technologies have been commercialized worldwide by major licensors such as Haldor Topsøe, Ammonia Casale, Uhde and KBR.

Ammonia Market Overview

Ammonia production in the U.S. is set to increase significantly, mainly due to the abundant availability of cheaper shale-based natural gas raw material, says Suresh. Most of the announced capacity expansion projects are connected to downstream products such as urea and ammonium nitrate. Demand from these products also helps to drive ammonia production.

Crop prices also exert an understandably big impact fertilizer demand. “Crop price, like corn to fertilizer prices, has had a steady correlation,” says Suresh. In 2014, crop prices fell and farmers cut their application of fertilizers. In general, higher crop prices encourage farmers to apply more fertilizers to increase productivity and, consequently, increase their income. Lower crop prices tend to have an opposite effect.

Read more at
IHS Engineering360, June 2015.

Changing Regulations and Energy Costs Impact the Global Chlor-alkali Industry

Originally published 21 April 2015 on IHS Engineering360.

The term “chlor-alkali” refers to the manufacturing of chlorine (chlor) and a strong base, typically sodium hydroxide (alkali), two chemicals that are simultaneously produced by the electrolysis of brine (a solution of salt in water). These two chemicals are the main products of the chlor-alkali industry. Both are produced in a fixed stoichiometric ratio: for each unit of chlorine produced, 1.13 units of sodium hydroxide are produced.

In terms of chlor-alkali production, energy consumption has always been a strong driver to cost. It is among the highest energy consuming processes due to its dependency on energy intensive electrochemical technology. The cost of electricity makes up around 40-60% of the operating cash costs, and therefore has an influence in the production cycle.

IHS Quarterly recently reported that, “one plant can consume as much electricity as a small country” and energy can account for up to 70% of chlor-alkali variable costs. As a result, engineers have been trying to lower that figure while maintaining production requirements in order to increase overall profit.

Membrane cell technology was found to lower operating costs by an average of around 6%. However, additional caustic soda conccentration steps must be provided, leading to additional energy (steam) requirements.

During the last half of the 19th century, chlorine was almost solely used in the textile and paper industry. Today, that industry amounts to roughly 3% of chlorine demand. The main end-use is for chlorinated compounds such as PVC that account for roughly 34% of the market. Further uses are in water treatment, chlorinated intermediates, inorganic and organic chemicals, among others.

“The ratio of chlorine demand between end users varies greatly between regions,” says George Eisenhauer, Director at IHS Chemicals. “Unlike chlorine, sodium hydroxide (also known as caustic soda) has multiple end uses, with none dominant like PVC.”

Read more at
IHS Engineering360, April 2015.

Are Growth Prospects Stunted for Plant-based Chemicals?

Originally published 03 March 2015 on IHS Engineering360.

Crude oil and natural gas have long been the primary feedstocks for the global chemical industry. But renewable feedstocks such as sugar (from corn or sugarcane) and glycerin (from vegetable oils) have recently challenged the dominance of fossil fuels. Natural fats and oils have long served as feedstocks for fatty acids and fatty alcohols; starches and sugars are well-established starting materials for ethanol, lactic acid and sorbitol.

More recently, plant-derived feedstocks have emerged as starting materials for commodity chemicals such as ethylene, isoprene and para-xylene, as well as for novel chemicals such as 2,5-furandicarboxylic acid, isosorbide and farnesene. These bio-based building blocks are in various stages of commercial development.

The chemicals industry remains in constant motion, however, and recent developments in the petrochemical market have significantly changed the outlook for renewable chemicals. A glut of naphtha-based cracking capacity is coming on stream in Asia, easing concerns about future shortages of C3, C4, C5 and pygas feedstocks. Those concerns drove much of the interest in alternative routes to butadiene, isoprene and other chemicals.

Even so, corporate sustainability initiatives play a role in the development of bio-based chemicals and plastics. Coca-Cola Co., for instance, pledged in 2009 to use PlantBottle bio-based packaging for all Polyethylene terephthalate (PET) bottles by 2020. Automaker Ford used PlantBottle material for interior fabric fitted into a Ford Fusion Energi, introduced in 2013. The fabric consisted of up to 30% plant-based materials and covered the car’s seat cushions, seat backs, head restraints, door panel inserts and headliners.

Read more at
IHS Engineering360, March 2015.