Phenol, acetone FM sends US buyers shopping

25 August 2008 20:11  [Source: ICIS news]

HOUSTON (ICIS news)--US acetone and phenol buyers were unsure on Monday how the force majeure (FM) declared at Blue Island Phenol would affect the overall market, but began shopping for product as a precaution.

The FM was declared after a fire started on early Sunday morning, forcing the Blue Island plant in Illinois to shut down.

Authorities said a power failure may have played a role in starting the blaze, which is under investigation by the Illinois State Fire Department.

“As a result of the incident, we will be unable to meet contractual obligations for supply and must declare force majeure,” said spokesman Jerry Dunn. “We will communicate information regarding the expected duration of this force majeure as it becomes available.”

US phenol producers were already operating at rates below 70% due to weak demand, market players said.

On Friday, buyers, traders and sellers admitted that weak phenol demand kept low operating rates from hurting the overall supply picture.

“Even with two planned turnarounds coming up, weak downstream demand would lead to little impact on overall supply/demand balances,” a phenol trader said on Friday.

“Now with Blue Island down, supply will certainly get tighter, especially in the midwest,” the trader said on Monday.

The situation prompted renewed interest in the spot market, where offers for phenol and acetone were heard at 4 cent/lb ($88/tonne, €60/tonne) premiums to current posted levels, buyers and traders said.

The US phenol spot range was assessed on Friday in the low 70s cents/lb, while the acetone spot range was in the low 60s cents/lb, according to data from global chemical market intelligence service ICIS pricing. 

However, some buyers said the fire was unlikely to change things.

Blue Island Phenol is a small market participant, and downstream demand is already weak, a large buyer said. As such, there was likely to be little or no change to the market

Blue Island Phenol, formerly known as JLM, produces 59m lb/year (26,800 tonnes/year) of acetone and 95m lbs/year of phenol through cumene peroxidation.

Other US acetone and phenol sellers include Georgia Gulf, Dow Chemical, Shell, Sunoco and INEOS Phenol.

($1 = €0.68)

For more on acetone or phenol visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Heather McGuire Doyle
+1 713 525 2653

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