OUTLOOK ’12: US phenol-acetone market focusing on Sunoco cumene

28 December 2011 15:35  [Source: ICIS news]

By John Dietrich

The biggest concern for the US phenol-acetone market in 2012 is the possible shutdown of Sunoco’s cumene unit in Philadelphia, PennsylvaniaHOUSTON (ICIS)--The biggest concern for the US phenol-acetone market in 2012 is the possible shutdown of Sunoco’s cumene unit in Philadelphia, Pennsylvania.

Sunoco announced in September that it will shut down its Philadelphia refinery in Pennsylvania by 1 March 2012 if a buyer is not found.

The facility has a 545,000 tonne/year cumene unit, which is the fourth-largest cumene unit in the country, according to ICIS plants and projects.

Several phenol-acetone producers have said the potential loss of that cumene would be most felt by other producers in the US east coast and Gulf regions, particularly producers that do not have captive cumene production.

Among US producers who do not produce cumene are INEOS Phenol, Honeywell, SABIC Innovative Plastics and Dow Chemical.

If the Sunoco unit is shut down, it could push cumene prices in the US higher at the start of the year, even in the face of a potentially weak economy.

When several cumene units were shut down early in 2011, spot phenol prices increased by 15.5­–16.0 cents/lb ($341.71–352.74/tonne, €263.12–271.61/tonne) from mid-March to mid-May, reflecting tightness of supply.

Current US phenol spot prices are 53–57 cents/lb FOB (free on board), reflecting low demand from Asia and Latin America.

Several cumene producers said they expect to see a ramp-up in production at the start of 2012 to compensate for the expected loss, and sales should be healthy.

“We’re definitely keeping our options open and have plans in place should Sunoco shut down Philadelphia,” a cumene producer said.

However, even with tighter phenol-acetone supply expected in 2012, prices are not expected to increase as dramatically as they did in 2011.

“I think 2012 will be the inverse of 2011,” a producer said. “It will start out slow because of all the global economic concerns, and then hopefully strengthen in the second half of the year.”

Buyers and producers said the adder above benzene for formula-based phenol contracts for 2012 is being heard around 14–18 cents/lb, slightly stronger than in 2011.

A trader said this is only because negotiations for the adder took place in October, and that if they had taken place in December the adder would have fallen by 3 cents/lb.

A producer said it is also seeing more movement toward the adder above benzene being negotiated more frequently.

“Everybody is looking for protection from the economy right now,” the producer said. “We’ve seen more freely negotiated contracts this year, and we might see more negotiations for the benzene adder as well.”

The biggest demand segments for phenol in 2012 are expected to be polycarbonate (PC) and epoxy resins through bisphenol A (BPA) production.

This is because the automotive and consumer electronics goods markets appear healthier than the construction market, which is the chief consumer of phenolic resins.

On the acetone side for 2012, sources are expecting that production of methyl methacrylate (MMA) and prices for propylene will be the driving factors.

MMA production is expected to increase in 2012 as Lucite completes the restart of its 155,000 tonne/year Beaumont plant in Texas at the end of the first half or start of the second half.

Evonik is also planning to debottleneck at its Fortier plant in Louisiana, although estimates of production gain have not been published.

A potential increase in MMA production is expected to push acetone from structurally long to balanced. This would ease pressure on the phenol side for most producers.

On the feedstock side, propylene inventories ended December at 75-month highs, putting downward pressure on prices. However, continued cracking of ethane is expected to keep tightening propylene availability.

For benzene, global economic concerns are expected to push down on crude oil prices, keeping benzene costs lower.

($1 = €0.77)

For more on phenol and acetone visit ICIS chemical intelligence


By: John Dietrich
713-525-2600



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