The European cumene market continues to be weak

According to the latest report from S&P Global Platts, limited end-user demand is affecting the market sentiment of the entire European phenol and acetone value chain. The outlook for the raw material isopropylbenzene is bleak due to the current oversupply in the region, and it is expected that the weak fundamentals and pessimistic outlook will continue until 2024. This has led some major producers to reevaluate their isopropylbenzene and phenol production footprint in Europe and consider shutting down some older assets.

Related companies are closing factories

In late June, Ineos Phenol, a subsidiary of Ineos Group, announced that it would consider restructuring its production operations at the Doel plant near Antwerp, Belgium, to strengthen the competitiveness of its phenol business in the Antwerp region due to difficult market conditions. According to Ineos, the Doel plant is the world's largest phenol production facility, with a nominal capacity of 680,000 tons per year. The plant produces phenol, acetone, and α-methylstyrene (AMS) using isopropylbenzene as a feedstock. Earlier this year, Olin Corporation announced in March that it had ceased operations at its 735,000-ton-per-year isopropylbenzene plant in Terneuzen, Netherlands, in the first quarter. About 90% of the isopropylbenzene produced at the plant was supplied to Ineos Phenol in Antwerp as a raw material. The Terneuzen plant was Olin's only isopropylbenzene production facility. Earlier this year, Ineos started up a new 750,000-ton-per-year isopropylbenzene plant in Marl, Germany, and closed an older 260,000-ton-per-year isopropylbenzene plant at the same location. The new Ineos plant has begun supplying isopropylbenzene to the company's phenol plants in Doel and Gladbeck, Germany, replacing the supply previously provided by Olin's Terneuzen plant.

It is understood that once Ineos completes final integration testing and begins ramping up production at the new Marl plant, BP will shut down its 500,000-ton-per-year isopropylbenzene plant at its Geel refinery in Germany. BP has been supplying isopropylbenzene to Ineos' German plant for phenol production. S&P Global Platts said that if BP ultimately shuts down its isopropylbenzene plant, Ineos may continue to source benzene and refinery-grade propylene from the Geel refinery for use as raw materials in the company's isopropylbenzene plant in Marl.

In Europe, Olin Corporation also closed a bisphenol A (BPA) production line in Stade, Germany, in the fourth quarter of 2022. According to S&P Global Platts' Chemical Economics Handbook, the phenol market is mainly driven by demand for BPA, which accounts for nearly half of global phenol consumption. Demand for phenol, acetone, AMS, and BPA is mainly driven by the production of polycarbonate (PC) and other plastics, phenolic resins, synthetic fibers, and solvents.

In December 2022, Cepsa announced the closure of production capacity in Europe and North America, including a 300,000-ton-per-year styrene plant in Brunsbüttel, Germany, and one of two 80,000-ton-per-year PC production lines in Stade. The company said the move was due to its lack of competitiveness in the global market. Cepsa will continue to operate its other PC production line in Stade for downstream composite production.

Weak end-user demand in Europe

S&P Global Platts said that the overall sentiment in the European petrochemical industry in the first half of 2023 is one of weak demand and oversupply. Sources said that Ineos' new isopropylbenzene plant in Marl was supposed to start operations in 2021 and has been operating at very low utilization rates since its start-up. The Gladbeck phenol plant is Ineos' largest single-series phenol complex, including over 650,000 tons per year of phenol and 400,000 tons per year of acetone.

In its announcement regarding the potential restructuring of the Doel plant, Ineos stated that the phenol unit at the plant has not been restarted since completing maintenance in the fall of 2022. Ineos said, "High energy prices, high inflation, and a slowdown in cyclical demand have significantly reduced industrial demand for chemicals, and end-users of phenol and acetone have significantly reduced production. Additionally, there is competition from import suppliers in Asia."

Ineos is the world's largest producer of phenol and acetone, with a production capacity of nearly 1.9 million tons per year of phenol and approximately 1.4 million tons per year of acetone. The company's phenol facilities are located in Europe, North America, and Asia, while its acetone facilities are located in Europe and North America.

Overall, the current market conditions in the European phenol and acetone value chain are challenging due to weak end-user demand, oversupply, and competition from import suppliers in Asia. Major producers are reevaluating their production footprint in the region and considering shutting down older assets to strengthen their competitiveness. However, the market outlook may improve in the long term with the expected recovery of end-user demand and the growth of the plastics and synthetic fibers industries.