CMAI Completes 2011 World Cumene Phenol & Acetone Analysis

HOUSTON, Jan. 13, 2011 /PRNewswire/ -- Chemical Market Associates, Inc. (CMAI) announces the completion of the 2011 World Cumene Phenol & Acetone Analysis, an annual global study that covers historical trends and future projections for supply, demand, production, capacity, trade, pricing and profitability of the global bisphenol A, cumene, phenol, and acetone industries for the period 2005 to 2015. Included with each analysis is 12 months access to CMAI's online capacity and supply/demand databases with a mid-term supply/demand update, incorporating CMAI's latest market outlook.  The analysis is a necessary resource for business managers and planning professionals who need to make strategic business decisions in a rapidly changing global economic and market environment.

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Current Market Situation

North America and Europe have seen strong domestic phenol demand rebound in 2010 but neither returned to the volume levels seen in 2007.  Interestingly, both regions experienced strong increases in demand into the nylon chain; not because of domestic nylon demand but rather for export to Asia.  Additionally, bisphenol A demand saw a quick and sustained rebound for both regions.  Northeast Asia, on the other hand, not only grew in 2010 but it also did not suffer the contractions in the phenol chain seen in most parts of the world.  The strength in Asia, primarily China, has allowed North American and European producers to export phenol to Asia at prices higher than their domestic markets.  The result of these conditions led to strong overall exports with volumes in many cases approaching the levels seen in 2008.  Many believed more could have been shipped, however, supply constraints due to raw material availability for cumene coupled with some phenol production issues limited exports for some producers both in North America and Europe.

The phenol price differential between the North American and European markets with the Asian markets was made possible due to the freely negotiated nature of the Asian phenol markets.  This freely negotiated environment allows prices to rise with higher demand and limited supply in classic economics fashion while the North American and European markets have a significant portion of their phenol volume moving on a formula basis with fixed margin that doesn't allow them to capitalize on tight market conditions.  With Asian balances being so tight, phenol prices for the Far East pushed above $1,700 per ton quite easily and this was more than sufficient to pay for the freight for the Western regions to ship to Asia as well as subsidized the relatively low acetone prices that subsequently occurred with the higher phenol/acetone operating rates creating length in the acetone markets.

Market Outlook

What a difference a year makes. In early 2009 it appeared the market was in ruin and while demand improved throughout the year it was hard to imagine that 2010 could perform as well as it did.  The expectation was that the global phenol market would be over supplied for years to come.  A better than expected rebound in demand and less available phenol capacity resulting from shutdowns coupled with delayed projects led to a sharp recovery for operating rates.  While the change in the outlook is different from a year ago, we must keep in mind that this was expected to eventually occur, the timing was simply moved forward by better than expected demand and changes to the supply side.

Our forecast calls for global phenol demand to increase by 3.6 percent during the time period 2010 to 2015. This may appear on the low side, however keep in mind that 2010 is the base year of this forecast and we now believe the pent up demand/rebound year was in 2010.  Phenol capacity additions are very limited until 2013 when over 900 thousand metric tons of capacity will be coming on line; thus the expectation is that phenol operating rates on a global basis will reach 89 percent in 2012 before falling to the mid-80s thereafter.  The market today and the outlook for the next two years calls for tight markets and this will more than likely kindle expansion plans.

To find out more about the market issues and CMAI's outlook for this industry, order the 2011 World Cumene Phenol & Acetone Analysis now at www.cmaiglobal.com. The analysis is presented in book and CD-ROM format, along with access to CMAI's online capacity and supply/demand databases. Updates to the capacity database are available to clients throughout the year as they occur, and a bi-annual update to the supply/demand database provides a fresh view as the markets develop. Clients benefit from the up-to-date market information which is necessary for strategic business decisions.

CMAI is the premier provider of Market, Planning and Business Advisory services offering a unique combination of consulting analytics and expertise for the global chemical, plastics, fibers and chlor-alkali industries. With offices in Houston, New York, London, Dubai, Düsseldorf, Bangkok, Singapore and Shanghai, CMAI has provided expert business advisory services to a broad base of companies across multiple value chains and geographies since 1979.  Clients to CMAI services include chemical and oil companies, technology & EPC companies, law firms, banking and financial institutions, plastic converters, textile & apparel manufacturers, brand-owners, grocers/retailers, government agencies and trading companies. 

For more information on the 2011 World Cumene Phenol & Acetone Analysis, visit CMAI's website at www.cmaiglobal.com or contact:

SOURCE Chemical Market Associates, Inc.