Petrochemical Trading

Petrochemicals are an essential part of the chemical industry. The final consumer never sees these chemicals as they undergo several transformations before becoming part of the final product the consumer buys.

They play a fundamental role in many areas of our everyday lives from their presence in household goods, electronics, medicines, and leisure to highly specialised fields such as renewable energy or crime detection. Increasing product demands has meant an increase in refineries, plants and consequently jobs meaning the petrochemical industry is an important player in many countries’ economies.

Redstone Commodity Search have a strong network within the petrochemical industry and our energy team has completed assignments in the petrochemical sector across the globe in Africa, Asia, Middle East, Europe, and USA (our vacancies).

Recently, we have assisted international clients with the following hires:

  • Petrochemicals Marketing Director, Switzerland
  • Petrochemicals Trader, Switzerland
  • Methanol Trader, Singapore
  • Petrochemicals Operations Manager, Saudi Arabia
  • Global Petrochemical Logistics Analyst, Bahrain
  • Petrochemicals Broker, Netherlands

Types of Petrochemicals

Petrochemicals are chemical products derived from petroleum or natural gas.

The two most common categories are Olefins and Aromatics. Crude oil and natural gas are refined and processed respectively to produce naphtha, ethane, propane/liquefied petroleum gas (LPG) and methane. A series of further processes such as steam cracking, catalytic reforming and propane dehydrogenation results in a multitude of petrochemicals which eventually make their way in to products which the final customer sees.

Examples of petrochemicals and their derivatives include:

Olefins (Alkenes):

  • Ethylene – ethylbenzene, ethylene oxide, ethyl alcohol, ethylene dichloride, polyethylenes, acetaldehyde, ethanolamines, ethylene glycol ethers, diethylene glycol, styrene
  • Propylene – acrylonitrile, cumene, propylene oxide, isopropanol, butyraldehyde, acrylic acid, polypropylene, phenol, acetone, propylene glycol, isopropyl acetate,
  • Butadiene – styrene butadiene rubber, nitrite synthetic rubber

Aromatics:

  • Benzene – ethylbenzene, cumene, cyclohexane, methyl diphenyl disocyanate (MDI), alkylbenzene
  • Toluene – toluene disocyanate, polyurethane
  • Xylene – paraxylene, orthoxylene

In addition to petrochemicals there are speciality and organic chemicals that are not produced through oil and gas. Speciality chemicals subcategories include adhesives, agrichemicals, cleaning materials, cosmetic additives, elastomers, food additives and lubricants. They differ from other chemicals in that each one may have only one or two uses. They are used industrially for specific purposes. While some speciality chemicals are organic chemicals, not all are.

Organic chemicals are a class of substances containing at least one carbon atom. Examples of organic chemicals include acyclic hydrocarbons, cyclic alcohols, phenols, ethers, ketone peroxides, carboxylic acids and sugars.

How are they traded?

Most petrochemical plants are located near oil-producing and oil-refining centres or near natural gas sources due to the difficulty and cost of transporting feedstock (raw materials instrumental in petrochemical manufacturing). The USA (Louisiana and Texas) and Western Europe (the UK and the Netherlands) are home to some largest petrochemical industries however there is major new growth in the Middle East (Saudi Arabia) and Asia (India, China and Japan). China’s aspiration to become self-sufficient in petrochemicals has driven it to become the world’s largest chemicals producer. Physical traders tend to deal in multiple oil products with few trading solely in petrochemicals.

Petrochemical products are typically produced in volumes smaller than the capacity of an entire tank vessel. Pipelines are not an economical option so they are mostly transported by rail and on parcel tankers. In order to hedge exposure against feedstock prices, companies can trade in futures contracts on the derivative market to lock prices. Options contacts are also available on trading platforms.

Petrochemicals derivative contact examples include:

Chicago Mercantile Exchange (CME):

  • Far East Propane (Argus) Calendar Month Future
  • Mont Belvieu Natural Gasoline (OPIS) Calendar Month Future
  • Mont Belvieu Normal Butane (OPIS) Calendar Month Future
  • European Propane CIF ARA (Argus) vs. European Naphtha Cargoes CIF NWE (Platts) Spread BALMO Future

Contact details found here.

Intercontinental Exchange (ICE):

Singapore exchange (SGX):

  • SGX ICIS LLDPE CFR China Swaps and Futures
  • SGX ICIS LLDPE CFR SE. Asia Swaps and Futures
  • SGX ICIS PP Flat Yarn (Raffia) CFR China Swaps and Futures
  • SGX ICIS PP Flat Yarn (Raffia) CFR S.E. Asia Swaps and Futures

Petrochemical Uses

Olefins (Alkenes):

  • Ethylene – in consumer electronics, automotive components, food packaging, footwear, tyres, paper, adhesives, detergents, medical equipment, pharmaceuticals
  • Propylene – sports equipment, textiles, furniture, construction, acrylic paints, sportswear, unbreakable glass, kitchen appliances
  • Butadiene – gardening implements detergents, agrochemicals, fuel, chewing gum, engine lubricants

Aromatics:

  • Benzene – furniture, pharmaceuticals, sports equipment, CDs, automotive components
  • Toluene – sports equipment, coatings, inks, adhesives, chemical processing
  • Xylene – building and construction, textiles

Who are the customers?

  • Automotive/transportation
  • Packaging manufacturers
  • Building/construction
  • Industrial
  • Medial/Pharmaceutical
  • Textiles
  • Electrical/electronics
  • Aircraft/aerospace

 

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