US chemical profile: Phenol

25 January 2010 00:00  [Source: ICB]

USES
The largest market for phenol is bisphenol A (BPA), which accounts for approximately 45% of phenol demand. BPA is driven by growth in polycarbonate (PC) resins. Phenolic resins are the second largest outlet for phenol, followed by caprolactam (capro), alkylphenols, aniline and adipic acid.

SUPPLY/DEMAND
Phenol demand in the US is particularly adversely affected by the general economic slowdown and downturn in housing construction. The phenolic resin sector, which accounts for 28% of phenol demand, was especially hard hit by the slump in the US housing market. The slowing economy has also softened BPA demand in all its application sectors.

A demand drop-off in November 2009 was expected when buyers began destocking year-end inventory. On the other end, sellers have begun curtailing production to match phenol demand.

The industry-wide operating rate had been around 60-70% during the third quarter of 2009, but is now estimated 50%. US demand is expected to grow from 1.97m tonnes in 2007 to 2.13m tonnes in 2011, according to ICIS.

PRICE
US phenol spot prices grew stronger on export demand and higher benzene costs, players confirmed during the week ended January 15. Meanwhile, US phenol contract prices had previously moved up by 1.7 cents/lb in December, rising alongside benzene costs.

Sellers are looking at a potential 8 cent/lb hike in January, following the settlement of benzene prices, according to global market intelligence service ICIS pricing.

In October, phenol prices had slipped by 2.6 cents/lb ($57/tonne) in the US. This was in line with the 19 cent/gal benzene drop in the previous month. November phenol prices were expected to rise because of the November benzene increase. Benzene contracts in November rose by 9.6% to $2.85/gal, up by 25 cents/gal month on month.

Despite weak demand throughout 2009, most players have chosen to settle in line with benzene moves in order to secure the necessary phenol supply.

TECHNOLOGY
There are three synthetic routes to phenol, with cumene-based technology being the dominant process. In this route, benzene and propylene are reacted to form cumene, which is oxidized to hydroperoxide, followed by acid-catalyzed cleavage. The resulting products are phenol and acetone. The cumene route is considered the most economic route to phenol, supported by demand for acetone.

A small number of producers use an older process of chlorobenzene hydrolysis. The third route is based on a two-step liquid phase oxidation of toluene.

Anglo-Dutch major Shell Chemicals has developed a phenol process that coproduces both acetone and methyl ethyl ketone (MEK). The process has the potential to change the acetone/MEK ratio within reasonable limits to meet varying market demands.

OUTLOOK
Growth in optical media such as CDs and DVDs has traditionally been the driving force behind PC demand, and hence BPA demand and, further back, phenol. But this growth is slowing significantly as optical media is being replaced by alternatives like MP3 players, high internet bandwidth and USB drives.

There is still some long-term growth expected in PC in other sectors such as plastic alloys for automotive and electronic products.

Phenol demand growth in the US is projected to be 2%/year through to 2011. Strong growth is projected for the use of phenol in polyphenylene oxide engineering resins, via ortho-xylenol, but this is a small market for phenol.

US PHENOL CAPACITY '000 TONNES/YEAR
Company Location Capacity
Blue Island Phenol Blue Island, Illinois 45
Dakota Gasification Beulah, North Dakota 16
Emerald Kalama Chemical Kalama, Washington 35
Georgia Gulf Plaquemine, Louisiana 227
INEOS Phenol Theodore, Alabama 540
Merisol USA­ Houston, Texas 16
SABIC Innovative Plastics Mount Vernon, Indiana 340
Shell Deer Park, Texas 590
Sunoco Haverhill, Ohio 265
Frankford, Pennsylvania 500
Dow Chemical Freeport, Texas 295
TOTAL 2,869
SOURCE: ICIS PLANTS & PROJECTS

Profile last published November 17, 2008

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By: Feliza Mirasol
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