Phenol-acetone fall may put sellers out of business

03 June 2008 17:40  [Source: ICIS news]

BUDAPEST (ICIS news)--The weakness of the global phenol-acetone market has been triggered by the grave economic situation in the US and producers may go out of business, said the CEO of chemicals company JLM Industries on Tuesday.

 

Producers and consumers had to “share in the pain”, said John MacDonald at the 5th ICIS World Phenol/Acetone Conference here, adding if something was not done to improve the situation the market would see producers closing down, a sentiment that was recently shared with by participants in Europe.

 

MacDonald sounded bemused as to why new plants were scheduled to come on stream in expectation of demand. He felt that the plans needed to be pushed back until demand exceeded capacity and that the market needed some serious rationalisation.

 

“Falling house prices at 25%, the steepest decline in history, rising food prices, rising unemployment … were contributing to the decline of the industry in the US,” he said.

 

Phenol was in better shape than benzene in the US, however, he said, adding the market needed “another nickel of margin enhancement”.

 

The main problem he felt was with acetone and where it was going to go.

 

“Acetone today is less than the value of naphtha and in 40 years I have never seen this,” he said. “I don’t know where 300,000 tonnes of acetone will go - it needs to go somewhere.”

 

“There is a story and it is not a happy one,” he said. “What we have to do is not sell phenol and acetone freely negotiated, it should be related to cumene otherwise there are too many yardsticks”.     

 

MacDonald expected inflation in the US to go above 7% and thought that the situation was “looking worse” going forward and he also predicted a hard time for China.  

 

“I think China is in real trouble since there won’t be as much to export to the US,” he said.

 

“The earthquake in China and the Olympics will lead to a recession,” he said. “Every country that holds the Olympics goes into a recession straight after.”

 

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By: Julia Meehan
+44 20 8652 3214

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