Closing of US Philadelphia refinery may reduce cumene exports

HOUSTON (ICIS)–The closure of a refinery that was damaged by a fire has a cumene unit, and that could cause US exports of the material to decline, an ICIS consultant said on Thursday.

The cumene chain will likely experience the biggest effects of the decision by Philadelphia Energy Solutions to shut down its refining complex in Philadelphia, Pennsylvania. The decision came after a fire at an alkylation unit in the complex.

Philadelphia Energy Solutions said the winding down should put the refinery complex in a position to be sold and restarted. The company did not elaborate on the likelihood of anyone buying the complex or when any deal could take place.

The refinery’s cumene unit has a capacity of 612,000 tonnes/year.

The US market can withstand the loss of the cumene unit. However, exports likely would be reduced, said Michele Bossi, consultant, aromatics & derivatives, ICIS.

US cumene capacity exceeds domestic consumption by 800,000 tonnes/year, according to ICIS Supply and Demand data.

The US exported about 67,000 tonnes more cumene in 2018 than it imported. In 2019 through April, the US has exported about 38,000 tonnes more cumene than it has imported.

The following chart shows monthly US trade balances for cumene.

While more cumene could become available through increased production rates or changes to export levels, the refinery’s East Coast location can make it difficult for its customers to source material from other parts of the US. Most US cumene capacity is on the US Gulf Coast.

“There is plenty of cumene capacity in the US,” a market source said. “It becomes a different logistic arrangement, but there is plenty of spare capacity.”

The company likely to be most affected by the cumene shutdown is AdvanSix, which uses the material to make phenol for its nylon chain and sells co-product acetone.

“It will have a huge impact on AdvanSix and will force them to look for other sources, shortening the US cumene market big time,” a market source said.

Another source expects the cumene market will tighten only slightly as refineries would increase production if there is increased demand.

“I feel that there is enough cumene available from the US Gulf,” the source said.

AdvanSix said that the refinery is just one of several sources of its cumene. AdvanSix said it is continuing to operate its plants while implementing mitigation plans. That includes evaluating business-interruption insurance.

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In addition to the cumene unit, the Philadelphia complex has refining units that produced propylene and aromatics.

Most, if not all, of the refinery’s propylene is used by the complex’s cumene and alkylation units.

The refinery actually consumed more benzene than it produced, given that it had a cumene unit that used the material as feedstock, said Stephanie Kirby, senior analyst – Americas, ICIS.

As a result, shutting down the refinery could actually add to US benzene supplies, she said.

For benzene in general, the product is long globally, in spite of the recent rise in US prices, said Rob Peacock, ICIS consultant.

For the other aromatics, Philadelphia Energy Solutions really is not a player in the merchant xylenes market, Peacock said. Its toluene production should be easily replaced.

Both markets are relatively balanced for the time of the year, he said.

The shutdown of the refinery will likely affect gasoline prices, and that should affect toluene and xylenes prices in the short term, Peacock said.

Toluene and xylenes are both octane boosters that can be blended into gasoline.

Participants in the aromatics market expressed more concern about how the refinery shutdown could affect cumene markets.

One benzene producer said the refinery had only limited benzene production. The loss of the cumene unit could cause other plants to run at higher production rates.

adds cumene capacity, paragraph 4

Additional reporting by Al Greenwood and Lucas Hall

Image above shows the Philadelphia refinery on fire. Photo by Matt Rourke/AP/Shutterstock

Focus article by Jessie Waldheim

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