Chemical Profile Acetone

28 April 2003 00:00  [Source: ICB Americas]

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ACETONE    April 28, 2003

PRODUCER

CAPACITY*

Dow Chemical, Freeport, Tex.

395

Dow Chemical, Institute, W.Va.

170

Georgia Gulf, Pasadena, Tex.

95

Georgia Gulf, Plaquemine, La.

305

Goodyear Tire and Rubber, Bayport, Tex.

15

Ineos Phenol, Theodore, Ala.

605

JLM Chemicals, Blue Island, III.

55

Mount Vernon Phenol Plant Partnership, Mount Vernon, Ind.

430

Shell, Deer Park, Tex.

715

Sunoco, Frankford, Pa.

680

Sunoco, Haverhill, Ohio

590

Total

4,055



*Millions of pounds per year of acetone. More than 90 percent of US acetone is produced as a co-product with phenol through cumene peroxidation. About 0.62 pounds of acetone are produced per pound of phenol. Ineos PLC purchased Phenolchemie with its acetone plant in Theodore, Ala., from Degussa-Hls in May 2001. At the end of 2002, another 55 million pounds of capacity were added as the result of a phenol production expansion, raising the annual acetone capacity to 605 million pounds. Frontier Oil Corp. acquired the El Dorado, Kan., refinery with its acetone capacity in 1999, from Equilon. In 2002, Frontier decided to withdraw from the petrochemicals business in order to concentrate on its oil refining operations and eliminated 65 million pounds of acetone capacity at El Dorado. Because of diminished phenol demand, in 2002, Georgia Gulf Corp. mothballed its smaller plant at Pasadena, Tex., thereby temporarily removing 95 million pounds of acetone capacity from the marketplace. The plant will be down indefinitely, until market demand for phenol improves. Sunoco Inc. acquired Aristech Chemical Corp. from Mitsubishi Corp. in January 2001, and along with it, the acetone unit in Haverhill, Ohio. Aristech had previously completed a phenol/acetone expansion in the fourth quarter of 1999, raising the acetone capacity at Haverhill to 590 million pounds. Dow Chemical Company acquired Union Carbide Corp. in February 2001, and with it, the acetone production facility in Institute, W.Va. The plant produces acetone by dehydrogenating isopropyl alcohol shipped from Dow's Texas City, Tex., plant. The Mount Vernon Phenol Plant Partnership was established in 1987 with GE holding 49 percent; Citgo Petroleum, 49 percent; and JLM Industries, 2 percent. GE Plastics operates the plant, and JLM Industries manages all merchant sales. Profile last published 4/5/99; this revision 4/28/03.

DEMAND
2001: 2.60 billion pounds; 2002: 2.62 billion pounds; 2006: 2.90 billion pounds, projected. Demand equals production plus imports, which were 25 million pounds in 2001 and 84 million pounds in 2002, less exports, which were 512 million pounds in 2001 and 560 million pounds in 2002.

GROWTH
Historical (1997-2002): 0.9 percent per year; Future: 2.5 percent per year through 2006.

PRICE
Historical (1997-2002): High, 20.75 cents per pound, contract, Gulf Coast, barges, MMA grade; low, 11 cents, same basis. Current: 20 cents to 22 cents same basis.

USES
Acetone cyanohydrin for methyl methacrylate (MMA), 42 percent; bisphenol-A, 24

 
percent; solvent uses, 17 percent; Aldol chemicals (MIBK and MIBC), 13 percent; miscellaneous, 4 percent.

STRENGTH
Worldwide methyl methacrylate (MMA) demand recovered in 2002, driven by increased demand for polymethyl methacrylate used by the construction industry in place of glass where shatterproof protection is required. MMA demand, acetone's largest application segment, should grow at slightly better than 3 percent in North America as the economy improves. Bisphenol-A, acetone's second largest application segment, has more than doubled its consumption during the past decade, driven primarily by heavy demand for polycarbonate resins, most notably in automotive applications. Optical media, including audio compact discs (CDs), CD-ROMs, recordable CDs and digital versatile disks (DVDs) is another large segment that is doing well for bisphenol-A due to polycarbonate resins demand. Bisphenol-A is growing at nearly 7 percent annually.

WEAKNESS
Economic activity greatly affects acetone's demand. Acetone's demand (as for phenol's as well) is heavily dependent on automobiles, construction and the electronics businesses. As such, the economy's decline in 2001 caused a major dip in demand for acetone. Acetone's one year performance between 2000 and 2001 was a negative 9 percent. The following year, 2002, saw generally flat demand for acetone, which might be interpreted as a bottom or turning point for acetone and the general economic health as well.

OUTLOOK
Acetone became tight during last year's fourth quarter. There was a three-month outage at the Ineos Phenol plant in Theodore, Ala., because of a fire there, and plant shutdowns by Frontier at El Dorado, Kan., and Georgia Gulf at Pasadena, Tex. All together, these events suddenly removed nearly 20 percent of the industry's capacity. Pricing subsequently increased to where it is currently about 7 cents per pound above last year's average for MMA grade. Pricing is expected to remain at this level well into 2003, until the demand for phenol im-proves and thereby stimulates increased by-product acetone production. Growth over the forecasted period is estimated to be 2.5 percent annually.





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