Phenol and Acetone Markets in Flux

24 December 2001 00:00  [Source: ICB Americas]

Weak demand and protracted oversupply are forcing a shakeout in the acetone and phenol markets. Frontier Oil and Refining Company is withdrawing from those markets, and The Plaza Group, which currently distributes Frontier's material, is entering into long-term supply agreements with at least two other major producers.

Frontier owns the El Dorado, Kan., refinery formerly owned by Equilon. That facility has capacities of 67 million pounds of acetone, 110 million pounds of phenol, and 2 million pounds of alpha methyl styrene. Frontier is shifting its production toward motor gasoline because that market is tight whereas acetone and phenol are expected to remain oversupplied for several years.

Randy Velarde, president of The Plaza Group, stresses that his company is growing as a supplier of acetone and phenol. The Plaza Group will account for an even larger share of the US market once its new distribution agreements are finalized.

"Over the past several months, we have worked with Frontier toward a successful conclusion of phenol and acetone operations," Mr. Velarde says.

Since 1994, The Plaza Group has been the sole marketer of chemical intermediates produced by the El Dorado facility. In 1994, The Plaza Group entered into its original supply agreement with Texaco Refining and Marketing, which owned the El Dorado facility. In 1997, the plant became part of Equilon, a joint venture between Shell Oil Products and Texaco Refining and Marketing. Frontier bought the refinery in 1999.

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