CEPSA Quimica mothballs 150,000 t/year Huelva phenol/acetone line

30 June 2010 12:27  [Source: ICIS news]

LONDON (ICIS news)--CEPSA Quimica has officially decommissioned line one of its three phenol/acetone lines in Huelva, Spain, and it was unlikely the line would ever be brought back on stream, a company source said on Wednesday.

CEPSA had been operating the Huelva plant at reduced rates since June 2008 in response to the global economic downturn with line one, which has a phenol production capacity of 150,000 tonnes/year, idled since the end of that year.

“It will remain idled probably forever,” the company source said.

The decision to mothball the line was due to a combination of factors: labour issues, a lack of profitability and an expected global supply glut in acetone, the source said.

Acetone is a by-product of phenol and one tonne of phenol produces 0.62 tonnes of acetone. There could be as much as a 200,000 tonne/year surplus of acetone by 2015 due to differences in global demand for each product, Michael Foeste, phenol product manager at Mitsui & Co Deutschland, had previously predicted.

CEPSA Quimica has the capacity to produce a total of 600,000 tonnes/year of phenol and 370,000 tonnes/year of acetone at Huelva. The second production line at Huelva has a nameplate capacity of 200,000 tonnes/year of phenol, while the third line has a nameplate capacity of 250,000 tonnes/year of phenol, the source said.

The announcement follows a period of tight supply in the acetone and phenol markets, due to several recent force majeure (FM) declarations at INEOS Phenol, CEPSA and Borealis from April to early-June.

Nevertheless, a resolution of production problems has eased availability issues, particularly in the acetone market, where imports were entering the market from the US.

“Acetone demand is probably robust, but with imports coming in and production problems being resolved, there will be a natural imbalance between supply and demand,” an acetone buyer said.

Supply in the phenol market, although easing, remained tight due to a backlog of orders resulting from production outages, sources said. Strong demand from the downstream polyamide chain, as well as the bis-phenol A (BPA) and methyl methacrylate (MMA) markets, had a further tightening impact on the market, sources agreed.

“The supply situation has really improved, but phenol inventories are still low because of all the constraints. The general mood is that the [phenol] market is recovering,” said a major phenol buyer, which uses the product for manufacturing BPA.

Additional reporting: Julia Meehan

($1 = €0.81)

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By: Mark Victory
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