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February 02, 2022What is the outlook for the Higher Alpha Olefins business?
Higher alpha olefins (C8+) account for only 30 percent of the market share of linear alpha olefins (LAOs) and the segment is not as fast growing as the polyethylene comonomer group (i.e. C4-C8). The imbalance, in part has driven the development of on-purpose technology. However, recent LAO investments by Shell, INEOS, ExxonMobil and Sinopec have all been into full-range capacity. This raises the question - what is the outlook for the higher alpha olefins market?
Linear alpha olefins (LAO) value chain
The C10-C14 range accounts for around 66 percent of consumption of HAOs. This fraction is mainly used in polyalpha olefins (PAOs) and detergent alcohols. Market Insights: Higher Alpha Olefins - 2021 | NexantECA focusses on this range of HAOs with an even-numbered carbon chain, namely:
- C10 LAO – decene-1
- C12 LAO – dodecene-1
- C14 LAO – tetradecene-1
The decene-1 market is very much driven by polyalpholefins (PAO). Polyalphaolefins (PAO) are high quality type IV base oils that are used for lubricants’ production and are mainly produced from decene-1, although small amounts of octene-1 and dodecene-1 are sometimes used.
The dodecene-1 market is mainly driven by the detergent/surfactants market in detergent alcohols and linear alkylbenzene (LAB). Linear alcohols, mainly in the C12-16 range, are intermediates used to produce alcohol ethoxylates (AE), alcohol sulphates (AS) and alcohol ethoxysulphates (AES) which are used as surfactants in laundry products, household cleaners and personal care products.
The tetradecene-1 market is very similar to that of dodecene-1 as this fraction is also used mainly in the bulk detergent sector. However, another main end-use for C14s is in the production of alpha olefin sulphonates (AOS). Alpha olefin sulphonates find use in household liquids, some shampoos, and several oil field applications.
Global C10-C14 LAO Demand by Type and End Use
What is expected to drive future growth in C10-C14 LAOs?
Historically PAO demand has been driven by tightening quality specifications of finished lubricants in performance applications such as in automatic transmission engines and a continuing shift from mineral oils to PAOs in higher-quality synthetic lubricants. Higher growth segments include the wind power generation sector.
Overview of Polyalphaolefins Value Chain
Market growth for the different surfactant use can be very much influenced by the activities of the major detergent formulators, such as Unilever and P&G. The major formulators are sensitive to end-use market needs and raw material price and availability. The overall detergent market is expected to show steady growth due to rising population, rising income levels, and changing laundry and personal care habits in regions such as India, Africa and elsewhere in Asia. Moreover, when palm oil prices are high, as seen recently, this can lead to increased demand for synthetic detergents based on LAOs. However, the largest markets in North America and Western Europe are now mature and growth is expected to be modest.
Overview of Detergent Intermediates Value Chain
What drives the recent investments in full-range capacity?
SHELL began production in January 2019 from its fourth alpha olefins unit, which can produce 425 000 tons per year of total alpha olefins, including butene-1. INEOS followed with a similarly sized plant starting up in mid-2020. ExxonMobil has announced that it will build its first full range plant in Baytown, Texas with a total capacity of 350 000 tons per year, which was planned to come onstream in 2022. INEOS has also entered into an agreement to build a 400 000 tons per year full-range LAO plant as part of the Amiral cracker project which is being developed by Saudi Aramco and TOTAL in Saudi Arabia. The project will potentially include large-scale PAO production.
The investments made by SHELL and INEOS are not surprising as the market has been tight for LAOs in recent years and global capacity decreased following the permanent closure of the Shell plant in Stanlow, UK in 2019. However, the investment by ExxonMobil is at first glance more surprising as it will be the first investment in a full-range LAO plant by the company. Especially as the LAO business is dominated by four producers which account for almost 85 percent of global capacity and the technology is held tightly. However, ExxonMobil is involved in various end-uses that require LAOs including polyethylene, detergent alcohols and PAOs.
Find out more...
Market Insights: Higher Alpha Olefins - 2021 includes discussion regarding key market drivers and constraints, as well as supply, demand and trade analysis for nine regions: North America, South America, Western Europe, Central Europe, Eastern Europe, Middle East, Africa, Asia Pacific, and China with forecasts to 2035. Analysis, including competitive landscape, who’s who of suppliers and cost competitiveness along with price forecasts to 2035 and a snapshot of latest pricing trends is also included by region.
End-use analysis includes: C10 LAO (decene-1): PAO, plasticisers, detergents and others; C12 LAO (dodecene-1): detergent alcohols, LAB, lubes and others; and C14 LAO (tetradecene-1): detergent alcohols, AOS, fine chemicals and others.
The Author
Robert Hogan, Senior Analysts
About Us - NexantECA, the Energy and Chemicals Advisory company is the leading advisor to the energy, refining, and chemical industries. Our clientele ranges from major oil and chemical companies, governments, investors, and financial institutions to regulators, development agencies, and law firms. Using a combination of business and technical expertise, with deep and broad understanding of markets, technologies and economics, NexantECA provides solutions that our clients have relied upon for over 50 years.
