P.1 

OAR Box 1872 

Prepped by Keeia Richards 

Document Number: 

52) 11-1-101 

Docket Number: 

A-90-19 

Printed 11/26/2008 8:51:51 AM Sheet 52 of 204 
P.2 

• SENT BY-RIP. N. C, 2770S ; 5-3-8 1 :11:07AM J RADIAN CORPORA" ' A-9 0 1 Q 

MARCH 1990 

Pwrfouitcpon- August 1985 - TOLUEN E 

FOCUS....Toluene (elso called toluol) is an aromatic compound with important chemical ano fuel applications. While it is a key feedstock for raking benzene, via hydrcdealkyletion (HDA), it ie elso e desirable 

octane boosting component for gasoline blending, depending on the economics of competing octane enhancers 

snd refinery operating conditions. In 1S89 about 275-300 million gallons of isolated toluene are estimated 

to have been added to the gasoline pool. As crude oil prices decline, toluene becomes more attractive as 

an octane enhe.-.cer than oxygenated materials such as MTBE (methyl-t-butyl ether), methanol and fermentation-derived ethane!. Toluene has sleo been en important solvent for protective coatings, inks end adhesives, but use as a solvent has declined because of stricter air quality standards. 

Benzene ass the largest outlet for toluene in 1989. However, total demand for toluene in this use was 

not met due to numerous HDA plant outages. Benzene prices rose rapidly in response to supply shortages. 

HDA production of benzene from toluene is used to a large extent when the benzene price ia high relative 

to toluene, as was the case in 1989. Toluene demand peaked in 19S7/88 on the strength of very strong demand for HDA benzene and continued strong demand in the gasoline pool aa lead phesedown was accomplished.' 

OUTLOOK....US toluene demand should exhibit very modest growth over the next several years, primarily 

because competition frcm oxygenated octane enheneers ha6 increased cn the heels of increased legislative 

pressures concerning air quality, moving in the direction of removal of srometics from the gasoline pool. 

Growth in demand for toluene in gasoline appears to be slowing, and most major chemical and solvent 

requirements for toluene appear to be static near term. Benzene demand is expected to grow et about 3% per 

year, and some of this growth mill impact on toluene through HOA, although modestly. However, if toluene 

is removed from the gasoline pool to any great degree, its velue will no doubt droo ae surpluses will 

occur. In such a scenario increased toluene usage in dealkylation tc benzene should be expected. 

Little or no growth can be expected for the toluene derivative TDI (toluene dllsccyenete). Many 

urethane applications based on TDI are etstlc or have essentially reached the saturation point. HOI 

(methyl dipheryl dilsocysnete) is replacing TDI ir. both rigid end flexible urethane applications es it 

provides property advantages along with being less toxic to work with, TDI being elaeeifiee as a suspect 

carcinogen and M.DI is not. This replacement is particularly evident in automotive foem applications. 

Solvent applications for toluene will continue to decline.es environmental and economic considerations restrict the use of sclventa in general and particularly diluents and. weak active solvents such ee 

• toluene. The accelerating trend towards water-based, high solids and solventless protective coatings, inks 

end adhesives will reduce the potential for toluene usage. Stronger active oxygenated solvents such as 

methyl ethyl ketone will ce used instead of aromatics like toluene to provide low Volatile Organic Compounds (VOCs) . The installation of solvent recycling facilities by consumers, ss well 86 increased 

contract solvent recovery, will elso restrict requirements fcr virgin toluene production. 

PRICING....The floor price for toluene is generally estsblished by its blendstock velue in the gasoline 

pool. The upper price limit ia its feedstock value in the production of benzene by HDA. Thus, et any time 

published or trace "liet" prices ere essentially meaningless. Toluene prices werB es high es $1.20 per 

gallon in early 1SS9, before falling off ta the 75-80 cents per gallon range in the fall and then recovering to about 95 cents per gallon by year end. During the recent apectacular increases in benzene prices, 

toluene pricing did not exactly follow suit because of operating problems in the HOA area resulting in a 

reduced toluene usage. In addition, refiners were not looking fcr great quantities of toluene in the 

gasoline pool. Spot toluene prices are expected tc fluctuate in the range of $.90 - 1.05 per gallon over 

tne next several >ear9, es supplies should be plentiful allowing for demand to be met. 

AVERAGE PRICE RANGE - TOLUENE (PETROLEUM) 

Cent Fer Gallon - 'Industrial or Nitration Grade - Barges 

• «••••«•«•« HISTORICAL " « ••••• • PROJECTED • 

156S 1970 1075 19e0 19S5 1986 1987 1986 1989 1990 1992 

~7T T 7 "IT "TTT "T55 ~TE ~9U "~TuT ~13 • ""IDT Avg. Sales 19 16 IS 46 114 102* 80* 80* 86 82(E) • 

reported by the USITC through 1988, except for industry estimates 

>a . Sc 

(•:. 

rrLi rv*. 

> !(. . LI. w . 

1 IX. 

on: 

Petroleum 

Coke 

Total 

Imports 

Exports 

Demand 

I960 

241 

34 

275 

3 

51 

111 

1965 

524 

25 

569 

14 

47 

516 

B OI UOX 

1970 

313 

17 

83C 

93 

23 

900 

1975 

695 

IC 

705 

21 

116 

610 

1980 1985 

1009 

8 

1017 

77 

40 

1054 

704 

1 

7C5 

157 

2B 

834 

CBl.iL Ui 

1986 1987 

749(E) 967 

-

749 967 

138 95 

27 136 

860(E) 926 

1988 

87fc 

. 

874 

123 

76 

921 

1989 

804(E) 

. 

604 

87 

108 

783 

* rnCitL,ILU -

1990 1992 

» 

« 

* 

• 

• 

• 800 850 

Since 1982 the USITC has not reported toluene production by coke-oven operators. Coke-even output 

has been insignificant in recent years. Sales data for toluene produced by petroleum refiners 

include only high-purity (93-100%,' toluene. It is assumed that ell indicated output ia high purity. 

AVAILABILITY....Based on various trade estimates, US extraction and distillation capacity for toluene 

• ib'vega 1. 3 UllllU " y»llut>o. Willi U>e Uo" U luncuU o IBJWVIAWI I i n «»W.M«UC O i n iioo&llno, tr-»r» «r->owl° b« 

p.o shortage in toluene sucplies for chemical conversion, i-n the foreseeable future. Conversely, 

^--.,i«-.. . ~r .,-«. . .-••- . •_;»<-.»<>'•. ~- •, j '-P;C-« an industry-aide tret!*-. 
P.3 

. \ 

\ 

-A i^SSS^ / CT J 
P.4 

S c ^ BY I RIP, N, C. 27709 ; 5- 3—SI : 11:05AM : RADIAN CORPORATION- 215 643 27721 nil 

. " PRODUCERS - TOLUENE 

The following companies or affiliates were listed as 19SS manufacturers 

of toluene by the USITC (US International Trade Commission)! 

Amerada Hess (St. Croix) Coastal Corp. Phillips Petroleum 

American Petrofina Exxon Chemical Shell Chemical 

Arochem International (PR) Hill Petroleum Southwestern Refining 

Ashland Oil Koch Industries Sun Company 

BP Chemicals Lyondell Petrochemical Tenneco Oil 

Champlin Far a then Oil Texaco 

Chevron Chemical Mobil Oil Union Carbide 

END USES....Toluene is also referred to as methyl benzene end phenylmethene. The terminology "toluol" is 

often used interchangeably, but can also denote crude material. Toluene is e clear, flammable, refractive 

liquid with a benzere-like odor. The production of benzene by the hydrodaalkylstion (HDA) process is the 

largest chemical use for toluene. Other chemical derivatives include toluene diisocyanate, benzoic acid, 

benzeldehyde, dyee and explosives. Trinitrotoluene (TNT), for explosives, was at one time the major 

derivative. Toluene has also been widely used aa a solvent for paints, lacquers, inks and adhesives. It is 

a diluent used as a solvent for a variety of gume and reslne, as well se in extraction processes. As air 

pollution control ano ether environmental considerations become more important, toluene will continue to 

lose position to more powerful oxygenated solvents in many higher solids costing, ink and adhesives 

applications. 

Gesoline blending is the largest non-chemicsl application for toluene. U6e as an octane booeter or 

enhancer depends on the economics of the gasoline pool et any period of time. A B crude oil prices 

decrease, oxygenated additives such as methyl tert-butyl ether, methanol and tertiary butanol become less 

attractive. The economics of using higher octane toluene end mixed xylenes improve with lower gasoline 

prices. In the long run, the use of toluene in gesoline may decline subetsntially es lelgislation is 

enacted that will csuse s reduction in the amount cf aromatics allowed in gasoline, as a mean6 to reduce 

air pollution. Many of the major refiners are already working on "reformulated" gasoline eontsining lower 

amounts cf aromatics, and increased amounts of oxygenated materials to maintain the needed octane. 

The amcunt of benzene produced from toluene depends on the overall demand and price for benzene since 

benzene produced by HDA ccets more than that Isolated directly from refinery reformste streams or steam 

cracker pyrolysi6 gesclines. In the hydrodeelkylation process, toluene end hydrogen are reacted 

eetalyticaliy at elevates temperatures to yieic a mixture ur LCIUCI C ai«J mcLiior.e. in going fro* toiuer. 

to benzene, there is a weight ices of about 23*. The spread between toluene and benzene prices must be 

high enough tc justify operation of an HDA unit. 

Toluene ia a raw material for toluene diisocyanate (TDI) via the intermediate disminotoluer.e prior to 

reaction nith phosgene. TDI is used principally tc make urethane foams, with smeller volumes going to uses 

in protective coatings and elastomers. 

END USE PATTERN - 1989 ESTIMATE 

DERIVATIVE PERCENT 

Benzene Su1 

Gesoline Blending 34 

Toluene Diisocyanate 9 

Solvents 5 

Miscellaneous Chemicals 2 

MANUFACTURING....Although scrubbing of coke-oven gee was a mejcr source of toluene many yeer6 ago, now 

almost all toluene is derived from petroleum processing. \ew processes ars being developed which convert 

prccane ene butanes to aromatics, but these processes have yet to prove their commercial viability. 

'Most toluene is produced from selectee fractions of hydrocarbons rich in naphtnenea, by catalytic 

reforming or hydrofcrming. The process involves catalytic dehydrogenation in the presence of hydrogen to 

yield a mixture cf aromatic hydrocarbons, principally toluene. Naphtha feedstocks, obtained by 

distillation of crude petroleum streams, are vaporized at temperatures in excess of 1000 degrees F end, in 

the presence of 7C!i hydrogen gas, are passed through a reactor containing a dehydrogenation catalyst st 

pressures uo to 30C0 psi. After two passes through the reactor, the reformate, as the dehydrogenoted feed 

ie cslled, is normally fed to a Sulfolane unit for solvent extraction of the contained aromatics, and then 

to fractionation columns to separate specification benzene, toluene and mixed xylenes. 

Naphtha feedstock currently represents about 80fi of the cost of producing BTX. Efforts are 

continually being mace to improve the efficiency of catalytic reforming and extraction processing. 

Pyrolysis gasolines, produced aa by-producta of ethylene production frcm heavy liquid feeds such sa 

naphthss and ges oil, ere rich In aromatics. These pyrolysis gasolines are similar to catalytic reformates 

in that they are an excellent source of aromatic constituents: benzene, toluene end mixed xylenes. 

A nurber cf alternate catalytic processes for toluene have been developed, aa well es a variety of 

physical separation processes. The use of alternate routes depends on the composition of the feecs and the 

supply/demand situation for toluene. Gasoline blending is the largest outlet for toluene. Most toluene 

produced in the refineries is not isolated and remains as part of reformate fed into the gasoline pool. 

However, purified toluene is also beck-blended into the gasoline pool for octane enhancement. 

ENVIRONMENTAL ASPECTS....Toluene i9 not generally ccneidered to be B highly toxic chemical. However, under 

certain conditions, inhalation of vapor, may be hazardous. Vapors are irritating to the eyes and respiratory system and may CSU6B headache and wfusea. The 19S9/1990 ACCIH recommended thre8hold limit value timeweighted average is ICO ppm for an eight hour workday. The EPA, in 1984, decided not to regulate toluene 

sa e hazardous air pollutant under the Clean Air Act since toluene dees not pose e significant health risk 

to the public 

To the beet of our knowledge, the information contained herein is accurate. However, we 

do net assume 6ny liability whatsoever for the ccmclster.ess or accuracy of this report.