23 September 2004 10:52 [Source: ICIS news]
LONDON (CNI)--The US cumene industry is operating at almost full capacity and utilisation rates are likely to continue high for the near future, an industry expert told the DeWitt Aromatics Conference in Paris on Thursday.
This year’s boom in the US construction and automobile sectors has prompted a surge in demand for phenol, DeWitt vice president for benzene and derivatives Chuck Venezia revealed.
The resulting knock-on demand for cumene has rather taken the US cumene industry by surprise, according to Venezia, with US production in the first half of 2004 reaching 1.84m tonne.
This takes utilisation up to nearly 95% of the industry’s 3.9m tonne/year capacity – partly because plant mothballing and closures in 2002 took two merchant suppliers out of the business and slashed 500 000 tonne/year off the industry’s nameplate capacity.
Moreover, Venezia said, a new pricing mechanism has enabled producers to pass on virtually the whole of this year’s 130% explosion in benzene prices. Cumene prices in September have soared to $0.48-$0.52/lb, around double the late-2003 price.
However, one outcome of the high benzene price - combined with strong domestic US demand and productions problems - has been to hold down cumene inventories. Producers are naturally reluctant to build inventory using expensive benzene.
So although US cumene inventories have recovered slightly from the all-time low of 177m lb in the last quarter of 2003, they are still “quite tight”, according to Venezia. Combined with the projected slow growth of world cumene capacity – forecast at 1.4% annually until 2008 – this means capacity utilisation rates will remain high and supply tight, he said.
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