Shanghai phenol, acetone plant to lift Cepsa’s Asia market share

Jonathan Lopez

17-Jun-2014

Interview article by Jonathan Lopez

LONDON (ICIS)–Cepsa expects its new Shanghai plant to start operating at the end of 2014, with an annual nameplate capacity of 250,000 tonnes of phenol and 150,000 tonnes of acetone, which will gain market share in the Chinese market and avoid the freight costs of importing from Europe into Asia, said Fernando Iturrieta, the company’s director of chemicals, on Tuesday.

With this plant in China, Cepsa will have a network of facilities away from its home country, Spain, in order to meet demand where the growth is taking place at the moment, said Iturrieta, as Europe’s economy keeps lagging behind and growth rates are very poor.

That case is especially true for Spain, which is just emerging from a long recession after its property bubble crash in 2008.

On top of that, the Spanish energy  major is hopeful the plant in China will “cover the supply/demand imbalance for phenol and acetone” in the country, which is making it necessary to import considerable volumes of these intermediates.

On the back of that, Cepsa has secured commercial agreements with the main consumers of these products in China, one of them German chemical major Bayer MaterialScience.

Other companies based in the same Shanghai industrial park are Evonik or Lucite, to which Cepsa expects to sell its acetone as well. The company claims once the plant in Shanghai is up and running it will make it the second largest phenol and acetone producer worldwide.

“We are devoted to the Chinese market. Despite recent lower-than-expected growth figures, China will continue to be a growing market and Cepsa wants to be there. We are very proud of this project in Shanghai, as it is the first investment of Cepsa in Asia,” said Iturrieta.

“The reason to be in China has to be found in the fact that we were exporting from Spain to China but we realised that it was becoming almost unaffordable on the back of freight costs. Therefore, we decided to have our own facilities in the country to overcome that problem,” he added.

Cepsa’s Iturrieta also says in the future green chemicals could be a good compliment for oil-based chemicals, although their high costs makes them quite uncompetitive at the moment. However, he says there is a growing trend of customers demanding greener chemicals and the industry will have to respond to it.

“Green chemicals are for sure part of the future. It’s stupid to deny that. Some of our main customers are devoted to them and decided to base part of their product in this green feedstocks. Although they are still much more expensive than synthetic chemicals, I am sure they are part of the future and we’ll see them taking more and more share of the total consumption,” he said.

He recognises, however, that green chemicals are now very dependent on subsidies (especially in Europe) although he says as the sector becomes more competitive it will also become more able to work its way across the markets without state help.

Cepsa itself is “looking at developments,” especially regarding its linear alkyl benzene (LAB) products, trying to compliment synthetic feedstocks with natural ones, although Iturrieta does not give more details about the project.

He says Cepsa has been too concentrated in its home market and now it needs to gain customers and markets elsewhere as Spain is still emerging out of the recession. However, that wouldn’t mean, he says, the closure of its Spanish sites.

“The fact that the Spanish market is not growing as expected, and also due to growing refinery capacity in Asia and the Middle East, Cepsa has committed itself to grow in exploration and production, as well as chemicals. For that, we need to keep our plants in Spain efficient, by modernising them and reducing energy consumption,” concluded Iturrieta.

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