European phenol/acetone market reacts with surprise to Orlen closure news

LONDON (ICIS)–The European phenol and acetone market has reacted with surprise to the news that Orlen is to decommission its phenol and acetone plant in Plock, Poland, by the end of this year.

“This is an unexpected change,” one player said, with another commenting, “Wow, shocking news.”

The company’s press office said in a statement that the decision was taken due to technical and environmental considerations.

A phenol/acetone expansion was previously being considered at the site but the company said in its recent statement that the plant, which has been in operation for nearly 60 years, “would need an extensive and costly modernization.

“In addition, it would also be necessary to adapt it to demanding environmental regulations, which would generate further investment expenditure. The revenue generated from phenol and acetone would not balance the cost of the necessary investments.”

A market source commented, ” Interesting news considering the current market environment,” adding, “In the end it is not profitable enough.”

Another added that the closure reflects the terrible situation for phenol/acetone producers.

The European phenol and acetone market is oversupplied, with producers running at reduced rates and INEOS Phenol’s unit down in Antwerp, Belgium, for two and a half years for commercial reasons.

High energy costs and poor demand from key sectors such as automotive and construction are ongoing challenges for the market, as well as increasing global capacity.

Demand levels are currently further suppressed by tariff uncertainty.

The Plock unit produces 55,000 tonnes/year of phenol and 34,000 tonnes/year of acetone, making it the smallest unit in Europe.

The closure could mean more balance in eastern regions of Europe one source suggested.

A seller commented that the while the drop in overall European supply is small  “anything helps.”

Additional reporting by Will Conroy