US February cumene moves slightly higher on benzene

HOUSTON (ICIS)–The US cumene contract has settled up by 1 cent/lb ($22/tonne) for February, in line with the February benzene increase, sources confirmed on Wednesday.

The February benzene contract previously settled up by 25 cents/gal at $5.09/gal.

The increase took the February cumene price to a new range of 71-72 cents/lb, as assessed by ICIS.

Derivative phenol demand continues to be weak, and with operating rates averaging 65-70%, it is keeping cumene supply long. Also, the US phenol contract range for February was assessed only marginally higher as premiums fell, while February benzene also exerted upward price pressure.

Sources said that adders are at historic lows because producers are contending with poor phenol economics including soft demand and more than ample supply.

The process of permanently closing the 30,000 tonne/year Blue Island phenol plant near Chicago, Illinois, continued this week. An explosion and fire in mid-December injured two workers and led authorities to order the closure of the plant’s cumene unit until an exact cause was determined.

Demand from housing, which uses downstream phenolic resins, is uncertain, some statistics indicate, but others sources are more confident.

US home prices rose by 11.3% in 2013 compared with 2012, a Standard & Poor’s (S&P) housing survey indicated this week, but that news has a potential downside.

In Q4 2013, the S&P home-price index declined by 0.3%, in contrast to gains during the first three quarters of last year, reflecting a slowdown in month-to-month growth and indicating that the strongest part of the recovery in home values may be over, an S&P source said.

Major US cumene producers include Citgo, Flint Hills Resources, Axiall, Marathon, Philadelphia Energy Solutions and Shell Chemical.