US Q2 cumene production falls 11% in quarter-on-quarter

02 August 2012 17:07  [Source: ICIS news]

HOUSTON (ICIS)--US cumene production in the second quarter of 2012 fell by 11% quarter-on-quarter, according to data released on Thursday by the American Fuel & Petrochemical Manufacturers (AFPM).

US second-quarter production of cumene was 819,758 tonnes, down from 923,071 tonnes in the first quarter of 2012.

Operating rates fell throughout the quarter because of weaker demand in the downstream phenol-acetone market.

“The market is definitely soft,” a producer said during the quarter. “Spot demand is not what it was the first four months of the year.”

Much of the reason for the weaker demand for cumene was because weak export prices for phenol and acetone into Asia forced those producers to lower their operating rates.

Additionally, the second quarter saw speculation that Sunoco’s 545,000 tonne/year cumene unit at its Philadelphia refinery in Pennsylvania would keep running, which pushed cumene producers to lower their inventories.

Earlier in the year, most market players expected the refinery and cumene unit to be shut down, pushing cumene producers to build inventories -- but talks started to emerge that a joint venture would keep the unit running.

In June, Sunoco confirmed that it would form a joint venture with The Carlyle Group to keep the refinery and cumene unit running, easing supply concerns about the second half of 2012.

This was the main reason cumene inventories in the second quarter fell to 124,974 tonnes, down by 12% from inventories of 142,763 tonnes in the first quarter.

Cumene production for the second quarter was higher year on year, up by 3.4% from 792,589 tonnes in the second quarter of 2011, although much of this was attributed to production issues a year ago rather than stronger demand.

Cumene inventories fell by 32% year on year from 183,464 tonnes in the second quarter of 2011.

US cumene producers CITGO, Flint Hills Resources, Georgia Gulf, Marathon, Shell Chemical and Sunoco contributed to the AFPM’s data.

By: John Dietrich

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