08 December 2003 00:00 [Source: ICB Americas]The recent idling of Sunoco Chemicals' phenol one line in Haverhill, Ohio, should significantly boost industry operating rates, which have suffered from severe overcapacity. However, any boost to the industry could be short-lived, since substantial new capacity is slated to come on stream in Asia next year.
Phenol has been oversupplied globally since a round of capacity additions came on stream in 2000.
"Industry-wise, [the idling] will take operating rates from 84 percent to 90 percent," notes Ben Smith, director phenolics and nylon intermediate studies at Houston-based Chemical Market Associates Inc. "It's about 6 operating rate points-they are taking out that much capacity," he adds.
Sunoco says the decision to mothball its most inefficient line at Haverhill will allow it to maximize production at its two remaining Haverhill lines. "Sunoco is being an industry leader by doing this," says Mr. Smith. "It should be positive from a producer's point of view, and from a buyer's point of view it may or may not change things."
Sunoco's move is the latest in a string of phenol closings both temporary and permanent. Faced with suffocating overcapacity, Frontier Oil and Refining Company shuttered a 110 million pound unit in El Dorado, Kan., last year. Also last year, Georgia Gulf Corp. temporarily idled a 160 million pound per year plant in Pasadena, Tex.
Mr. Smith notes that there are two new 200,000 ton units slated to come on stream in Taiwan next year. "In the long run, there is still a lot more capacity coming on," he notes.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
Asian Chemical Connections