Favorite Performance in Chinese Phenol Market in 2010   

Summary of global phenol status

In 2010, it had approximately 9.5 million tons of phenol produced by factories around the world with an annual capacity of 10.9 million tons, which was considered to be "acceptable". Obviously, from Fig 1 shown below, Asian-Pacific region and America took a significant part in global phenol capacity, at 4.03 million tons in 37% and 3.27 million tons in 30%, and the rest was hold by Europe which 29% in west and 4% in east.
    However, a huge shortage of phenol supply might be confounded to global market in 2011 with overhaul schedule of Asian phenol plants. According to table 1 provided by authority, we could know the situation wouldn't be good in 2011, which numbers of large phenol plants would be turned off for several weeks by the reason of overhaul or capacity expanding, also most of them happened in the period of this summer. Therefore, the supply of phenol or related products in 2011 will come with a series of troubles.
Table 1 2011 Overhaul schedule of phenol plants in Asia
Plant    Plant Location    Overhaul Time
Mitsui Chemicals    Osaka, Japan    30 days in July
Mitsui Chemicals    Singapore    30 days in 3rd quarter
Mitsui Chemicals    Chiba, Japan    2 weeks in April
PTT Phenol Company Limited, Thailand    Thailand    2012
KKPC 2(Korea Kumho PetroChemical Co Ltd)    Korea    Mid-May to the end of June
KKPC 3(Korea Kumho PetroChemical Co Ltd)    Korea    Mid-May to the end of June
TPPC (Taiwan Prosperity Chemical Corp)    Kaohsiung,Taiwan    December 21, 2010 to middle of January, 2011
FCFC (Formosa Chemicals & Fiber Corporation)    Mailiao,Yunlin,Taiwan    March to April

Booming production in China

In China, the phenol capacity reached to 865 000 t/a in 2010 that took over nearly 10% of global totals, while it has a 32% increase compared with capacity in the previous year, which is mainly contributed by the participation of Sinopec SABIC Tianjin Petrochemical and plant updating of Sinopec Shanghai Gaoqiao, shown in table 2 below. Overall, in 2010 the output of China's phenol approached to 687 000 tons.
    As one of ethylene downstream plants in Tianjin, Sinopec-SABIC plant has an annual capacity of 210 000 tons phenol and 140 000 tons acetone, and its technology has been proven to be quite advanced by the combination of Sinopec innovation and technologies originated in UOP. With this new plant, Sinopec has been able to hold over 70% of phenol & acetone domestic capacity, especially in south China, the coming of Sinopec products changes market structure that once controlled by importers and Zhongxin Chemical Co Ltd, a subsidiary of Kingboard Chemical Holdings Ltd, located in Hong Kong.

Table 2 The output of domestic phenol in 2009 and 2010
Company    Capacity(kt/a)    Output in 2009(kt)    Output in 2010(kt)
Sinopec Shanghai Gaoqiao    216    145    201
Sinopec Beijing Yanshan Petrochemical     175    130    156
Sinopec SABIC Tianjin Petrochemical     210    N.A.    75
PetroChina Jilin Petrochemical     72    76    78
Bluestar Harbin Petroleum     72    80    76
Guangdong Kingboard Chemical    120    98    101
Total    865    529    687

Increasing consumption but single product structure

The phenol consumption in China was booming in 2010, the imported phenol volume rose up to 624 000 tons and has 8.9% growth rate with the comparison of 573 000 tons in 2009, shown in table 3 of phenol import statistics in 2010. Individually, Thailand and Japan made a good job for China phenol import, approximately 154 000 tons and 121 000 tons, occupying 26% and 19% of totals. The rest of imported phenol was dedicated by Taiwan province and United States, each in 90 000 tons.

Table 3  China phenol Import in 2010
Month    Import, ton    Average Price US$/t
Jan    46845.84    1265.20
Feb    61322.82    1239.21
Mar    65690.82    1308.66
Apr    41833.8    1352.27
May    50325.73    1457.59
Jun    37962.8    1521.97
July    40842.3    1451.55
Aug    41346.12    1516.78
Sep    63319.65    1546.18
Oct    60282.43    1626.04
Nov    54816.73    1713.85
Dec    59375.25    1667.66
Total    623958.99    1472.25

    Particularly, in 2010 the apparent consumption of phenol reached to 1.271 million tons with 16.4% more than that in 2009. As a major downstream product, BPA (bisphenol A) was a primary consumer for phenol, and its capacity has strongly climbed up to 600 000t/a in 2010 from 286 000t/a in 2008, which theoretically required 524 000 tons of phenol for 2011, twice as more than 2008.
    Overall, phenol demand in BPA industry has took over 24% of the whole market from the original 12%. However, phenol demand growth still has a limitation due to the instability of other downstream products such as phenolic resins, medicines and pesticides, which face the pressure of low added-value and environmental risk. Hence, by the single driver in BPA, the rise of phenol demand wouldn't present at a fairly high increase pace in the next few years.

Market trend analysis: fluctuating

It might be very hard to give a brief conclusion of China's phenol market trend in 2010 because the fluctuating price didn't tell purchasers how to make a reasonable decision. Alternatively, Fig 2 below shows the manufacture price of phenol in east China in 2010, and it was considered to be a good evidence to explain what happened for China's phenol market.
    After a narrow range of shock in the first quarter, phenol price rose up to RMB14 500/t in April by the impact of declining import amount and overhaul schedule in some factories. From May to August, the market expressed "V" shape with European debt crisis, which terminated at a highest point - RMB15 800/t in the middle of August. From September to the end of 2010, it showed a downturn for China's phenol price by recovery of large plants and "Energy saving and emission reduction" policy, the one and only rise appeared in the middle of October by the reason of temporary shut-down of plants in Sinopec-SABIC and Sinopec Shanghai Gaoqiao.

A more powerful demand expected

The increasing tendency of capacity, output and import amount in 2010 indicated a potential China's phenol market and also gives confidence to do