Chemical Profile - CUMENE

13 May 2002 00:00  [Source: ICB Americas]

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CUMENE    May 13, 2002

US PRODUCER	CAPACITY*
Chevron Phillips Chemical, Port Arthur, Tex.	990
Citgo Petroleum, Corpus Christi, Tex.	1,100
Coastal Eagle Point, Westville, N.J.	140
Georgia Gulf, Pasadena, Tex.	1,500
JLM Chemicals, Blue Island, Ill.	145
Koch Petroleum, Corpus Christi, Tex.	1,500
Marathon Ashland Petroleum, Catlettsburg, Ky.	800
Shell Chemical, Deer Park, Tex.	1,100

Sunoco, Philadelphia	1,200
Total	8,475

*Millions of pounds cumene (isopropylbenzene). All commercial production of cumene is via catalytic alkylation of benzene with propylene. Historically, solid phosphoric acid (SPA) on an alumina support was used as the catalyst, but since the mid-1990s, zeolite-based catalysts have largely displaced SPA. Frontier Oil Corp. recently closed the 150 million pound-per-year cumene unit (and phenol) at El Dorado, Kan., as the first step in increasing gasoline output. Texaco Refining and Marketing originally owned the refinery. In 1997, the plant became part of Equilon Enterprise LLC, a joint venture between Shell Oil Products and Texaco Refining and Marketing. Frontier bought the refinery in 1999. Chevron Corp. and Phillips Petroleum Company merged their chemicals operations into a 50-50 joint venture in 2000. The new entity is called Chevron Phillips Chemical Company LP.Sunoco is planning a debottlenecking project at Philadelphia that should add another 150 million pounds of capacity by 2004. Profile last published 3/22/99; this revision, 5/13/02.

PRICE
Historical (1996-2001): High, 24.7 cents per pound, contract, US Gulf, tanks, works; low, 15.7 cents, same basis. Current: 19.3 cents, same basis.

USES
Phenol/acetone, 98 percent; alpha-methylstyrene, 2 percent.

GROWTH
Historical (1996-2001): 2.9 percent per year; Future: 3.0 percent per year through 2005.

DEMAND
2000: 7.67 billion pounds; 2001: 6.89 billion pounds; 2005: 7.76 billion pounds. Demand equals production less exports, which were 254 million pounds in 2000 and 215 million pounds in 2001). Imports are negligible.

STRENGTH
The shift to zeolite-based catalysts in recent years has had a major impact on cumene production. Conversion to a zeolite-based process allows for gains in product purity, overall yield and production capacity, by allowing a much lower benzene-to-propylene feed ratio to operate. The effect has been to grow the installed capacity base without installing new hardware.

WEAKNESS
Ninety-eight percent of cumene is consumed for the production of phenol and acetone. Therefore, demand for cumene is strongly tied to the phenol market. The phenol and acetone markets continue to be hurt by overcapacity, flat pricing and weak demand. The market is yet another casualty of the global economic downturn as demand for bisphenol-A, the leading use for phenol, is down from reduced demand for polycarbonate and epoxy resins. Before 2001, US polycarbonate had been enjoying growth of almost 5 percent per year. Phenol demand depends on economic recovery, and consequently, so does cumene.

OUTLOOK
Demand for cumene fell sharply last year due to the collapse in phenol demand. With the improving economy this year, phenol's derivatives will begin a new market pull that will translate into a return to growth for cumene. US cumene demand is projected to grow at 3 percent annually through 2005. With the exception of Sunoco as noted above, the significant cumene capacity additions will take place in the Asia Pacific region (1.14 billion pounds) and Europe (638 million pounds) during the next three years.

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