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Catalysts as Specialty Chemicals – Meeting Growing Demand

When speaking of specialty chemicals, it is typical to assume products such as polyurethanes, personal-care chemicals, specialty coatings and specialty surfactants, etc. These are materials and products that are either precursors to or constituents of the things that surround us in our daily lives. However, amongst the most significant segments of specialty chemicals are catalysts – the material that the end-user does not get to see, but that is indispensable to the process of producing fuels and chemical products, specialty chemicals included.

One of the things that makes catalysts stand out as specialty chemicals is the high profitability of this segment – along with flavours & fragrances, high-performance thermoplastics and food additives, catalysts are amongst the leaders here. Interestingly, while other specialty chemicals start suffering from commoditization and hence slump in profitability because of the growing number of production facilities and producers, catalyst producers foresaw this threat over ten years ago. They stopped selling licenses to third parties thereby regulating the supply side of the market. All the new production facilities we have seen emerging in the last few years are either wholly or partially (through joint ventures) owned by the existing catalyst producers. Such an approach seems to work as a guarantee of sorts: the incumbents keep control over product sales and maintain business profitability.

Just as other specialty chemicals markets, the catalyst market seems to be promising thanks to consumption growth prospects. However, the expected growth rate is much lower here. One reservation: the catalyst market is not homogeneous; it is broken down into groups by industry of usage, which tells on the demand dynamics. The demand driver for refining catalysts, in particular, depends on the status and outlook of the refining industry, which varies quite significantly region to region. Thus, Europe sees refining capacity rationalization and, as a result, transformation or closing down of refineries; motor fuel requirements are mature and set – these factors constrain the demand growth for refining catalysts. Meanwhile, the intensive refining capacity expansion in the Middle East and Asia-Pacific region, the integration with petrochemical production through the construction of high-severity FCC units, as well as the requirements for motor fuels getting more stringent in some countries in the region (India, Indonesia, etc.) – all these ensure growing demand for refining catalysts.

Another group of catalysts – the ones for chemical production – seems to hold much more promise for demand growth. The expected sustainable growth of the global economy, the increasing purchase power of consumers and the chemical products displacing the traditional materials – these are the drivers that should keep the demand for chemical synthesis catalysts high.

On top of that, catalytic processes are gaining popularity in olefins production, creating a viable alternative to the conventional steam cracker. Here one can name propane dehydrogenation for on-purpose propylene production; further penetration of coal-to-chemicals processes in China through the realisation of the new projects based on MTO and CTO technologies, and development of methane-to-olefins technologies.

In the last few years, Asia-Pacific region has become a leading actor in the global refining and chemical stage, and catalyst producers act in the trend when focusing on this market. At the end of 2017, BASF, a leading global chemical company and supplier of catalysts, officially opened its new, world-scale chemical catalysts manufacturing plant in Caojing, Shanghai, China. The new plant is BASF’s first chemical catalysts manufacturing facility in the Asia-Pacific region. The BASF, wholly owned plant, is located in the Shanghai Chemical Industry Park (SCIP) in Caojing. It will supply the growing chemical industry in China and around the Asia-Pacific region with base metal catalysts and absorbents.

The Middle East is also one of the biggest in the world by volume of refining and chemical production, and there are no signs of a downturn. Feedstock availability and strategic location midway between the two major consumption markets, Europe and Asia, are, no doubt, the two key drivers for the development of refining and chemical industry in the Middle East. The construction and expansion of refining capacities in the region, along with increasing process complexity, refining-to-chemical integration and growing output of chemical production create a firm basis for robust growth in demand for catalysts.

Hence, one can reasonably expect increasing catalyst production capacities in the Middle East both through expansion of the existing plants and construction of new facilities. The most likely scenario, however, is that the new catalyst production facilities in the region would be either 100% subsidiaries of the existent global catalyst companies or their joint ventures with the middle-eastern oil and gas companies.

To find out more about modern refining and petrochemicals catalysts, please don't miss Euro Petroleum Consultants’ (EPC) specialized event ME-CAT that will be held on December 3-6, 2018 in Bahrain.

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August 2018