Benzene Production in MalaysiaIn Malaysia there are also some companies that produce benzene itself such as the Titan Petrochemicals (M) Sdn Bhd. Titan petrochemicals is one of the largest chemical producers in this country. In spite of that, some other companies that also producing benzene is John Chemicals Sdn Bhd. and Gremont Agrochem (M) Sdn. Bhd.Benzene is closely related to the petrochemical industries as it is one of the derivative products of the petroleum. Thus the market of petroleum can affect the production of this benzene. In the petroleum sector, the Malaysian petroleum industries stood at Ringgit Malaysia (RM) 57.2 billion, last year (2011). This industry includes petroleum products, petrochemicals, and natural gas. The rapid expansion of the industry is chiefly credited to the accessibility of oil and gas as feedstock, a strong foundation of supporting services, well-developed infrastructure, and the countrys strategic location within ASEAN and its closeness to the key markets in Asia Pacific ( John C. Kotz,Paul Treichel and John Raymond Townsend, 2009).Malaysia has 14th largest natural gas reserves and 23rd largest crude oil reserves in the world. Last year, the country produced 5,891 million standard cubic feet of natural gas and 691,600 barrels of oil equivalent of crude oil per day. The country is also has the largest production unit at a single location of liquefied natural gas with production capacity of 23 million metric ton per year. This show the petroleum industry in Malaysia is really in it does optimize condition comparing to other ASEAN or Asia country. Most of the petroleum companies work in association with Malaysia's national petroleum company, PETRONAS (HR Salsali, 1999).From being an importer of petroleum, Malaysia is now an exporter of major petroleum products. A wide range of petrochemicals like olefins, polyolefin, ethylene oxides, benzene and polyvinyl chloride are produced in the country. These plants have also added considerably to the development of local downstream plastic processing activities by providing a stable supply of feedstock material for the plastic industry.

Figure 2.7 shows the consumption and also the production of benzene in Malaysia for the last 10 years. Table below show the oil refineries that are available in Malaysia.

Figure 2.7: Malaysian Benzene Production and Consumption(HR Salsali, 1999)Production of benzene is closely related to the petrochemical industries because benzene is used as a component in in gasoline therefore oil refineries play such an important role in benzene production. List of some refineries that is available in Malaysia are show in Table 2.2.Table 2.2: Location of Oil Refineries in Malaysia (Association of Petrochemical Producers)Oil RefineryLocation

Petronas Penapisan (Terengganu) Sdn Bhd

Kerteh, Terengganu

Petronas Penapisan (Melaka) Sdn BhdTangga Batu, Melaka

Malaysia Refining Company Sdn BhdTangga Batu, Melaka

Shell Refining Company (FOM) BhdPort Dickson, Negeri Sembilan

Esso (Malaysia) Bhd

Port Dickson, Negeri Sembilan

Market Assessment ProductionTypically, global benzene demand grows at the same rate as the gross domestic product and in the next five years this is expected to continue. In Europe and North America, gasoline demand is forecast to decline which will have an impact on benzene production from reformate. On top of this, in North America the crackers have switched to lighter feeds which mean lower production volumes from pygas compared to history. Fortunately, benzene production in Asia will continue to grow at high rates particularly in Southeast Asia and the Indian subcontinent and so the region will continue to export product to North America and Western Europe. The main sources of supply will be from reformate and pygas as gasoline demand is growing in the region and naphtha is the dominant feedstock for the crackers. However, demand for polyester is a result of increased benzene production from paraxylene and also by the various processes from converting toluene to mixed xylenes and benzene. In the Middle East, benzene production is growing but so is demand so there will be only a small increase in net exports from this region during the forecast period.Asias benzene prices have gained by 6.8% since the start of the month and look set to remain firm on limited supply of prompt cargoes, and strong values of upstream crude andnaphtha, industry sources InEuropeand the US, problems in domestic productionmay also lead to stronger demand for Asian benzene, further tightening supply in this region.A window for arbitrage trades to theUSnarrowly opened last week, market sources said. Asian benzene prices may spike if more cargoes are moved to the West as regional supply is drying up. Northeast Asian benzene producers have either very little inventory left or completely sold-out on cargoes for September and October, market sources said. Southeast Asian benzene producers, on the other hand, do not have surplus to sell to the spot market, and are just producing enough to fulfill term contracts, they said.The shortage of prompt benzene cargoes, occurring at a time when crude and naphtha prices are on rise, has heightened speculative trades that have been driving up benzene prices in spite of weak demand.

Market Data for Raw MaterialFrom the process of toluene hydrodealkylation the main raw material needed are toluene and also hydrogen which will also treated as the main reacting agent and main source to produce benzene. Figure 2.3 show the price of natural hydrogen in USD.Table 2.3: Bulk Hydrogen Gas Price in 2004 ( CHEM99,2004)

Hydrogen as a gas is valued for its reactive and protective properties. Many industries such as electronics, foods, glass, chemicals, refining and more can benefit from its unique properties to improve quality, optimize performance and reduce costs. Our experienced applications teams across the globe can use their knowledge of your industry and application to provide you with a hydrogen supply and technology solution tomeet your unique needs (HR Salsali, 1999).There is several ways to supply hydrogen into the plant. The Air Products and Chemicals, Inc. provide several supply option for its customer such as in cylinder/cylinder packs, micro bulk solution, on-site gas generation or pipeline supply.Figure above show the trash cost calculation for united state department of energy for hydrogen which includes its forecast price untaxed in 2015 and 2020. Even though the future price of hydrogen may be expensive, today price for hydrogen are still stable and reasonable.

Figure 2.8: Trash cost of Hydrogen(John C. Kotz,Paul Treichel and John Raymond Townsend, 2009)

For toluene, the price is stated as figure below that correspond until 24th of august 2012. The price stated below (Table 2.4) is obtained from CHEM99. Table 2.4: Price List of Toluene in the World ( CHEM99)

Currently, three grades of toluene purity are available in the market: TDI, nitration, and commercial. TDI grade toluene is used to make isocyanates, which are combined with polyols in the manufacture of polyurethanes. Nitration grade toluene is widely used in the solvent market and also in the production of phenol, particularly in Europe. Both nitration and commercial grades are used as feed in the hydrodealkylation process, which strips off the methyl group from toluene to make benzene. ( John C. Kotz,Paul Treichel and John Raymond Townsend, 2009)The future demand of toluene is expected to increase rapidly until year 2020 based on its uses. Figure below show the demand of toluene from year 2000. The relation of benzene production and toluene is that toluene is used as a raw material in production f benzene via dehydroalkylation of toluene processes. Therefore, if the demand of toluene increases, the commercial price for toluene will also increase causing some problems in production of benzene. Figure 2.9: Toluene Global Demand by Volume (GBI research)In conclusion it can be said that this benzene industry is in a good condition and also is in a right track to continue this amazing development. More and more country especially in the Middle East and certain part of Western Europe are developing positively.

2.4.3 Current Price and FutureIn this production of benzene, there are three main chemicals that play important factor in ensuring the cost of production is at its optimum level. The three chemicals are the raw material and also benzene itself. Chemical used for the production through this toluene hydrodealkylation is hydrogen and also toluene. The prices of both toluene and hydrogen have been discussed in previous section. Firstly, for hydrogen supply, Table 2.5 below shows some companies in Malaysia and South East Asia that can supply hydrogen gas to the plant.Table 2.5 : Companies that supply HydrogenCompanyLocation

Future Green Enviro EnterpriseKlang, Selangor

Octagon Chemicals Sdn BhdKlang, Selangor

Praxair SingaporeSingapore

Praxair (Thailand) CompanyThailand

There is also some other supplier of hydrogen gas however, these companies was listed because the price of hydrogen that we will mention after this is based on these companies. Usually hydrogen will be selling in a cylinder thus a certain amount of cylinder will be required to actually purchase the hydrogen gas. The price for a unit of those cylinder is 100$ - 300% (RM 306.147 RM 918.452). For the future price of hydrogen, it will not deviate too much from the price nowadays because the production of hydrogen is usually independent and will not be affected by the recession of other industries.

Next moving on to toluene, its price is based on per metric ton where the price is 1300$ to 2000$ per ton (RM 3979.9 RM 6122.94). The price of toluene is based on these companies (Table 2.6) where they are some major suppliers of toluene in Malaysia.Table 2.6 : Companies that supply TolueneCompanyLocation

Chemfield Sdn BhdIpoh, Perak

Titan Petrochemicals (M) Sdn BhdKuala Lumpur, Malaysia

K. Z. H. Chemicals Sdn. Bhd. Bukit Mertajam, Penang , Malaysia

The future demand for benzene will cause the price to rise quite rapidly according so some analysis. Therefore, an alternative of obtaining new source of toluene is indeed needed or the usage of recycle toluene is now very much important. The price of the rise of this toluene cannot be predicted however, the increase of 30% and above will occur. Thus, the future price of benzene in around 10 years will be in region of 1500$ - 3000$.Lastly, for the most important chemical which is benzene, the standard value is around 1300$ - 1500$ which is in industrial grade benzene and having purity of 93%. This price is based on the production of benzene per ton, excluding tax for deliveries and also packaging. Various applications of benzene will cause its price to increase rapidly until year 2020. As discussed earlier, the consumption of benzene especially in Asia and Eastern Europe are increasing and the export demand for this raw material will affect the production. This will cause the price of benzene soaring due to this particular reason. The usage of benzene in many household and daily product also cause the price of this chemical to rise. It is expected that, the price will increase around 70% - 130% which will be around 2500$ - 3500$. This shows good sign in producing benzene where the profit that can be made from its production is quite high comparing to the relatively low price of the material needed to produce this product in hydrodealkaelation of toluene process.

DemandThe global demand for benzene has been growing slowly over the last decade. Global demand in 2000 was 27,337,573 tons, and increased to 29,109,204 in 2010 have showed in the Figure 3 below. Much of the increase in demand for benzene came from the Asia-Pacific region and the same trend is expected to continue in the future. Asia-Pacific is expected to account for 61.6% of the global benzene demand in 2020 which is expected to grow to reach to 42,292,167 tons in 2020. Benzene, global demand by volume, tons, 2000-2020 China will drive the demand with other asian countries.asian consumption will continue to dominate, provides an in-depth analysis of the global benzene industry. Figure 2.10 shows the pie chart of the world consumption of benzene.

Figure 2.10: Wold consumption demand of Benzene- CEH marketing research report abstract ( Articles Alley,2008)

Figure 2.11 below show the research presents detailed analysis and forecasts of the major economic and market trends affecting the global benzene markets. It also contains demand, production analysis and forecasts, drivers and restraints, end use analysis and forecasts and market share analysis of the major producers in the major regions of the world. In addition, it includes demand and production as well as historic and forecast price trends for all the major countries.The Middle East is also emerging as a production hub for various petrochemical commodities because of the advantage of access to low cost natural gas and crude oil, the starting points for any such commodity. As a result there are plans to increase the capacity for benzene production in Saudi Arabia in the future. The production by volume of benzene in Middle East and Africa is expected to increase at a 10.2% in the forecast period.

Figure 2.11: Benzene Supply or Demand Forecast (BERNAMA,2012). In the Figure 2.11 above by observing the above chart, the world demand will increase year by year. By 2003, the value of world demand will expected to increase about 45 million tons metric tonne per annual. One of the main reasons is the increasing of world population. Benzene are highly demand in much industry for example in basic ingredient in laundry detergent powder, polyesters, flame retardant and medical implants.

Benzene demand is expected to grow by a total of 7.2 million tons/year during 1998-2003, but capacity additions for benzene and most of its derivatives will exceed demand growth. This will cause operating rates to fall over the period. Benzene capacity utilization, expressed as a percentage, will be in the low to mid-70s. The demand also tracks consumption capacity, which is based on the nameplate capacity of downstream derivative plants. Consumption capacity utilization will be in the upper 70s, says the firm, primarily because global styrene capacity utilization will be closer to 92%. It is expected to account for about 55% of total benzene consumption during the forecast period. Although the economies of Asia are now severely depressed, this region will continue in the forefront, with annualized growth over the period at 4.8%. However, this compares to the annualized rate of 9.2% from the prior 6 years through 1997. Growth in Western Europe will be the second largest of the major regions, forecast at 2.3% over the period. Growth in U.S. and total North America is forecast at only 2.1% and 1.9%, respectively growth rates will be higher in the Middle East, and maybe even South America and Eastern Europe, but they are all coming from a small starting base.

2.4.4.1 Production growthBenzene production will keep pace with demand for the forecast period. Extraction of benzene from pyrolysis gasoline-a byproduct of ethylene production-will hold its share of total production at about 40%. Much of this will be driven by the need for more xylenes for paraxylene production. The latter is also the key driver for the newer disproportionation technologies that will cause the associated benzene production to increase from about 2.7 million tons in 1997 to 4.7 million tons by 2003. This will take the share from these sources from 10% to 15% by 2003. Although Western Europe will be increasing its producing base somewhat in response to the new legislation on gasoline calling for a limit of 1% benzene content by 2000, the region will still be structurally short of producing ellipse capacity. We forecast this shortfall will be primarily met by exportsellipse from the Middle East. Whileellipse Saudi Arabia is rapidly expanding its benzene producing base, it is also expanding its consuming base such that the nation itself will be mostly in balance during the forecast period. However, the region as a whole will remain the most, or one of the most, significant exporting regions, as availability from Iran, Turkey, and Israel increases. (Extracted from 1998 Oil & Gas Journal).