Economic potential

In 2014, our country managed to register a growth of 6.0% while

in 2015, it drop but still giving a positive growth which settle at 5.0% [1]. Regardless
of challenging economic environment and dropping of worlds oil price, given the
continuous support and expansion demand in domestic sector.

Our domestic demand was driven by private sector primarily. Malaysia

is expected to remain grow at 4%-4.5% in 2016 [1]. All these above are mainly
overview of how Malaysias current economy growth. Our main concern will be the
petrochemical industries, main target is styrene monomer. This will be further
discussing below.

Petrochemical industries in Malaysia in 2015 have shown Malaysia is

currently 16 world largest natural gas reserves followed by 28 th largest crude oil
th

reserves. Current production facility at single location of liquefied natural gas which
is also the biggest ever with capacity of 25.7 million metric tonnes per year [2].

As for styrene monomer production in Malaysia, Idemitsu which located

in Pasir Gudang, Johor remain the only sole producer of styrene monomer in
Malaysia which produce about 240 000 mty. Given the current demand in our
country, Idemistu itself is not capable to produce just to comply with current demand.

In 2016, the demand for styrene monomer is about 300 mty per year,
and will be increasing to 350,000 mty by 2020[2]. This is due to increasing
production of its additives such as polystyrene, expandable polystyrene, abs and
many more. Currently, our country still need to import styrene but low in quantity
which around 40 000 mty. Our plan target will be to fulfill Malaysia styrene demand
up to 90%. This will our styrene industries to grow and does not depend on imported
styrene.

Looking at the styrene itself as monomer to many product such as ABS

(heat resistant thermoplastic), SAN (automotive, electrical and electronic, household
apparatus), SB latex ( carpet and paper coating), PS (food container), EPS (building
application, high insulation) and unsaturated polyester resin (construction, boat
building, automotive and electrical industries) [7]. From here we can say that styrene
monomer can be used for so many purposes with numerous of additives as stated
before. One of the reasons the demand of styrene monomer is always negative (not
meeting the demand) due to its numerous purposes.
Supply and demand

Figure x show Malaysia styrene capacity [3]

Figure x show styrene market growth in Malaysia [3]

Current countrys demand as in 2018 : 320, 000 mty

Current countrys supply as in 2018: 240,000 mty

Imported styrene as in 2016 : 111,000 mty

Exported styrene as in 2016 : 41,00 mty

*2018 Is used as a year wear this styrene monomer plant will be completed.

Given that expected production of plant is 90% of country unfulfilled demand which is
72,000 mty. Another 10% of the demand can be done by importing the remaining
styrene either from USA or China [8].

Idemitsu opened up their plant in Pasir Gudang, Johor with budget of $47 millions in
1993 [4].The capacity is 60,000 mty of polystyrene. Later in 1994, they commenced
a new production unit that produce 200,000 mty (240,000 mty in 2009) styrene and
another 200,000 mty polystyrene. Using Idemitsu as basis:

Figure x show chemical engineering plant cost index

CE plant index in 1993 : 360

CE plant index in 2016 : 536.5

536.5
X $ 47 million : $ 70 millions
360

It is expected to have at least $70 million to build a styrene monomer

plant with capacity of 60,000 mty. We are taking Idemitsu as basis as they add
another production unit in 1997. Estimated cost would be twice which is $94 million.

536.5
X $ 94 milli on: $ 141 millions
360

$141 million is for 120,000 mty of styrene monomer. 90% of unfulfilled

demand is 72,000 mty. With this numbers, we are expecting a $141 million worth of
styrene monomer with capacity of 120,000 mty. The capacity might exceed the
targeted one but the number remains under the budget given in the question which is
$500 million. From here we can plan to increase the capacity of production. This
calculation only for building the plant, excluding human resources, utility and
feedstock.

Eventhough the capacity exceeded the targeted one, the product can be
export. With that, not only we fulfilled our country demand but also managed to sell
the product to other countries. Regarding the area covered, it was 100 acres during
the plant first built. After more production unit has been added such as styrene
monomer and more polystyrene, it increase to 274 acres including the port [5]. Our
styrene monomer plant should not exceed 274 acres.
Pricing of styrene monomer

Feed stock price (based on current year, 2016):

Benzene: $740
Ethylene: $1070

Material balance:

Ethylene + benzene -> ethylbenzene -> styrene

C6H6 + C2H4 C6H5CH2CH3 (1)

C6H5CH2CH3 C6H5CH=CH2 + H2 (2)

Chemical property

1. Benzene: 876 kg/m3 , 78.11 g/mol

2. Ethylene: 1.18 kg/m3 , 28.05 g/mol

3. Styrene: 909 kg/m , 104.15 g/mol

4. Hydrogen: 0.08988 kg/m , 2.01588 g/mol

*1 mole of ethylene reacts with 1 mole of benzene to produce 1 mole of

ethylbenzene. Further dehydrogenation will produce 1 mole of styrene
and 1 mole hydrogen gas. Convert to in mass, 0.2896 ton of ethylene
needed to react with 0.8053 ton of benzene to produce 1 ton of styrene
with excess of hydrogen gas. Unit ton has been used to simplified the
conversion.

Price of styrene: 0.2896($1070) + 0.896($740): $972.12

Taking consideration of few parameters:

Packaging : $30
ISO certification: 0.2
Technical service:0.1
Delivery : 0.1
Marketing support: 0.1

$972.12 + $30 = $1002.12 * 1.5 (weightage that has been taken into
consideration)

Final price: $1503.18

Current market price: $1048.00

Reference

[1]Country Report For Petrochemical In Malaysia. 2010. Print.

[2]"Chapter 7 Capital Cost Estimation". 2012. Presentation.

[3]Malaysia Petrochemical Country Report 2015. 2015. Print.

[4]".: MIDA | Malaysian Investment Development Authority :. | Home".

Fwwcloud.com. N.p., 2016. Web. 6 Oct. 2016.

[5]"Idemitsu Ups Malaysian PS". Icis.com. N.p., 1991. Web. 6 Oct. 2016.

6]"Styrene - Chemical Economics Handbook (CEH) | IHS Markit". Ihs.com. N.p.,

2015. Web. 3 Oct. 2016.

[7]"What Is Styrene Monomer And How Is It Used?". Shell.com. N.p., 2016. Web.
6 Oct. 2016.

[8] www.platts.com/petrochemical,. ASIA PETROCHEMICAL OUTLOOK H2 2016

AROMATICS AND BLENDSTOCKS. 2016. Print. Petrochemical Special Report.