29 October 2007 00:00 [Source: ICB]
Phenol's main users are bisphenol-A (BPA), phenolic resins, caprolactam (capro), adipic acid and plasticizers. BPA, used chiefly to make polycarbonate (PC) and epoxy resins, has emerged as the main outlet and accounted for 41% of global phenol consumed in 2006. Phenolic resins, which are used in adhesives, binders for insulation and for molding compounds, was next at 28%.
Strong growth is projected for the use of phenol in polyphenylene oxide engineering plastics, although this is from a fairly small base. Phenol is also used as a slimicide, as a disinfectant and as an anaesthetic in medicinal preparations.
Europe has been plagued by production issues for much of 2006 and 2007. Postponed expansions and delayed start-ups have kept supply tight, while demand has been strong. This year, Ertisa and Borealis have expanded output by 250,000 tonnes/year and 50,000 tonnes/year, respectively.
INEOS Phenol's 170,000 tonne/year increase in Antwerp, Belgium, is due by the end of December, but the company declared force majeure last week as technical difficulties are preventing half of the capacity going back online early next month as planned. Players are hoping to see some relief in availability next year.
US supply also remains tight, as plants go down for maintenance. Asian markets eased in September due to ample availability and poor Chinese phenolic resin demand.
European suppliers are talking of a €50-70/tonne increase for November contracts. October contracts settled down €9/tonne at €1,137-1,177/tonne FD NWE, following benzene feedstock. Spot price ideas are pinned at €1,340-1,440/tonne, but trade is minimal because of a lack of spare volumes.
Margins remain unsatisfactory for producers who are under pressure from co-product acetone. Support is growing to decouple phenol contracts from benzene to reflect market dynamics, and a new contract system could be implemented by some producers in January.
There are three synthetic routes to phenol, with cumene-based technology being dominant. A few producers use an older process based on the hydrolysis of chlorobenzene. A third is based on the liquid phase oxidation of toluene.
Development work is focused on avoiding the co-production of acetone. Alternative benzene-based processes, without acetone, have been discovered by Russia's Boreskov Institute of Catalysis with Solutia, and Japan's Mitsui Petrochemical. Shell Chemical has developed technology that co-produces acetone and methyl ethyl ketone (MEK), and has plans to build a 330,000 tonne/year plant in Singapore for 2011.
Global growth is put at 4-5%/year, mainly driven by PC, which is forecast to grow by an average 5-6%/year. In Western Europe, demand growth is talked at 3-4%/year by some producers, but others cite lower numbers of 1.5-2%/year. Growth in Asia is put at 6-8%/year. Despite the growth of capacity in Asia, the region remains a net importer. Western Europe is expected to increase its export volumes in the near term after the recent capacity additions. The US will remain a large net exporter, benefiting from its low-cost propylene position.
No more projects are expected in Europe with the next wave of investment due in 2010-2011. New capacity is planned in the Middle East (United Arab Emirates, Iran and Saudi Arabia) and Asia (China, Taiwan, Singapore, South Korea and Thailand). INEOS Phenol plans a 400,000 tonne/year plant in Zhangiagang, China, for 2010.
European phenol capacity, '000 tonnes/year
|Deza||Valasske Mezirici, Czech Republic||130|
|Domo Caproleuna||Leuna, Germany||150|
|INEOS Phenol||Antwerp, Belgium||680*|
|Omsk Kauchuk JSC||Omsk, Russia||56|
|Polimeri Europa||Mantova, Italy||300|
|Porto Torres, Italy||220|
|PKN Orlen||Plock, Poland||55|
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