New Asia capacities will not hurt Europe phenol market – panel

19 June 2012 15:38  [Source: ICIS news]

MADRID (ICIS)--The European phenol market does not see the new capacities that are due to come on stream in Asia from 2013–2015 as too much of a challenge, industry executives said on Tuesday.

Speaking at the 7th ICIS World Phenol-Acetone Conference in Madrid, Spain, a panel of industry executives agreed that the new capacities are needed in Asia to soak up domestic demand for phenol derivatives, largely polycarbonate (PC) production.

CEPSA Quimica senior vice president commercial Fernando Irisari said: "We are building a new plant in Asia because this is where we believe the market is."

In October last year, Spanish producer CEPSA Quimica laid the foundation stone for a $200m (€158m) project capable of producing 250,000 tonnes/year of phenol and 150,000 tonnes/year of acetone in Shanghai, China. Start-up is scheduled for the end of 2013.

“Logistically speaking, getting from Europe to the Far East is getting more expensive. There is a huge problem in the shipping industry using low sulphur fuel and it [shipping costs] will get more and more expensive,” added Irisari.

“Everybody [is] just-in-time buying – new capacities will be placed in Asia,” he said.

Also answering the question of the challenges to the phenol market when new capacities come on stream, Georg Buellesbach, from Mitsui & Co, Deutschland, said he did not expect to see all the new capacities coming on line at once, and that he believes demand is strong enough in Europe.

“Looking at northwest Europe in terms of polycarbonate and epoxy resins, we have healthy demand here in Europe,” said Buellesbach.

“There is a bigger demand for upstream products, in this respect the upstream capacities in Europe, they will have a good life. Look at polyurethanes [PU]. Bayer and BASF have made announcements. I’m not so worried about it [new capacities] as such,” he added.

Because of rising freight costs and a lack of visibility, it was agreed that the Asian and European market would eventually separate as consumers chose to buy from producers that they are located closer to.

"Strong demand for more environmentally friendly construction, such as battery houses. Germany is turning to more green sources made out of epoxy resin and wind turbines were growing like mushrooms,” said Buellesbach.

Speaking on behalf of producer Bayer MaterialScience, director of phenol and acetone procurement Thomas Nitsche agreed that the way forward for the European market was that consumers bought the phenol from local suppliers.

Nitsche saw the main growth in the electronics sector and not so much in demand for polycarbonates for glazing for car manufacturing.

“Demand is very positive in car glazing – really coming on now. The more expensive the car the higher the consumption of PC. The world is increasing and the electronics markets is where the growth is … maybe the automotive is the joker in the pack,” said Nitsche.

Major producer INEOS Phenol also saw the supply and demand of phenol settling down.

“First of all the world needs a new plant. It needs to keep up with current demand,” said INEOS Phenol commercial director Ron Coyle.

“New capacity won’t kill that market – it will impact margins and volume but the industry will adjust to it,” said Coyle.

($1 = €0.79)

By: Julia Meehan
+44 20 8652 3214

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