Product profile: Phenol

18 August 2003 00:00  [Source: ICB]

 
The sector is set for some interesting times. Anti-dumping duties, new capacity, lower demand growth and potential closures are just some of the issues companies are facing
Uses

Phenol's main consumers are bisphenol-A (BPA) and phenolic resins. BPA, used in polycarbonate (PC), is the dominant user, accounting for about 36% of global output, followed by phenolic resins and then fibre intermediate caprolactam.

Other uses include polyphenylene oxide (PPO) engineering plastics, alkylphenols, adipic acid, aniline, chlorinated phenols and diphenols. Phenol is also used as a slimicide, disinfectant and anaesthetic in medicinal preparations, as well as in pharmaceuticals and acetylsalicylic acid.

Supply/demand

The tight market in Europe during quarter two (Q2) has now returned to a more comfortable supply situation. A series of outages shortened availability in the first half of the year and demand was reasonably buoyant into most sectors. However, demand into BPA and resins slowed in the latter part of Q2 and players voice concerns on the current state of global BPA and PC markets. Consumption into caprolactam remains weak.

China's recent imposition of provisional anti-dumping duties on product from the US, Japan, Taiwan and South Korea, has stimulated fresh export business for European producers. Prices in China soared to $850/tonne CFR in late July, compared with European spot levels of E600-630/ tonne fob.

Ineos debottlenecked its Gladbeck, Germany, plant last year, raising capacity by 10 000 tonne/year. Its Antwerp, Belgium, plant will be expanded by 30 000 tonne/year by 2004. Rhodia sold its assets to Bain Capital late last year.

Pricing

European contract prices have dropped in the third quarter (Q3) to E740-780/tonne FD NWE, from values above E900/tonne in Q2, although lower numbers are also heard in the E700-720/tonne range. The dip is an adjustment to the E200/tonne fall in benzene feedstock costs in Q3. Spot levels have drifted down to the low $600s/tonne in early August.

Technology

Cumene-based technology is the dominant process. In this route, benzene and propylene are reacted to form cumene, which is oxidised to the hydroperoxide, followed by acid-catalysed cleavage to yield phenol and acetone. It is considered to be the most economic route, supported by demand for co-product acetone.

A few producers use an older process involving the hydrolysis of chlorobenzene. A third route is DSM's liquid phase oxidation of toluene, starting with the oxidation of toluene to benzoic acid which is further oxidised to phenol.

Development work now concentrates on processes that avoid the co-production of acetone. Russia's Boreskov Institute of Catalysis and Solutia have developed a one-step process directly from benzene but plans for a commercial plant in Pensacola, US, remain suspended. Mitsui Petrochemical has developed a process without co-product acetone where benzene is partially hydrogenated to cyclohexane, converted to cyclohexanol and then dehydrogenated to phenol. Japanese researchers have also developed a one-step benzene oxidation process using a platinum membrane.

Health and safety

Pure phenol occurs as colourless to yellow crystals, which turn pink on exposure to light and air. It is solid at ambient temperatures and is normally sold in bulk quantities as a heated liquid. It reacts with oxidants and is a fire and explosion hazard, forming toxic sooty fumes on burning. Vapours are corrosive to body tissues. It is rapidly absorbed through the skin, causing systemic poisoning.

Outlook

The sector is still grappling with global overcapacity and lower than expected demand. Also, predicted growth rates for its main consumer, PC, are now less optimistic. Unless demand picks up to absorb excess supply, older units could close.

CMAI is forecasting demand growth in western Europe at 3.5%/year to 2007, and global growth of 4.4%/year. The strongest growth will take place in Asia (excluding Japan) and the region is bringing on capacity much faster than originally envisaged. Several projects are slated for China with others in South Korea, Taiwan and Thailand. Ineos still plans a plant in Asia, with Thailand preferred over China.

In Europe, investment is focused on plant debottlenecking with plans at Ineos, Ertisa and Borealis, while Rhodia could restart its mothballed plant in France if needed. Consumption will rise in 2004 with the startup of GE's second PC plant in Spain. CMAI expects Europe may move to become a net importer in the next few years.

European phenol capacity, '000 tonne/year
Company Location Capacity

Bain Capital

Roussillon, France 105

Borealis

Porvoo, Finland 130

Deza

Valasske Mezirici,
Czech Republic 12

Domo Caproleuna

Leuna, Germany 150

DSM

Botlek, Netherlands 120

Ertisa

Huelva, Spain 370

Ineos Phenol

Antwerp, Belgium 420
Gladbeck,Germany 640

Petrobrazi

Brazi, Romania 75

Polimeri Europa

Mantova, Italy 300
Porto Torres, Italy 180

PKN

Plock, Poland 35

Saratovorgsintez

Saratov, Russia 43

Ufaorgsintez

Ufa, Russia 75
Source: CMAI




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