Analysis of the Phenol Market in China

By Zhang Guihua,  PetroChina Jilin Petrochemical Co., Ltd. Research Institute
Sun Hongju,  PetroChina Jilin Petrochemical Co., Ltd. Calcium Carbide Plant


Phenol is mainly used to produce phenolic resin, caprolactam, bisphenol A, adipic acid, aniline, alkyl phenol and salicylic acid. It can also be used as solvent, reagent and antiseptic.

Production

Phenol production in China mainly uses the cumin process, with acetone as byproduct of phenol. Producing one ton of phenol generates 0.6 ton of acetone. Pushed by the market demand, the capacity of phenol in China was almost doubled from the end of 2011 to 2013. The capacity of phenol in China was around 900 kt/a in 2011. A Dongying-based 220 kt/a phenol unit of Lihuayi Group Weiyuan Chemical Co., Ltd. and a Yangzhou-based 200 kt/a phenol unit of Kingboard (Yangzhou) Shiyou Chemical Co., Ltd. started production in 2012. ChangChun Chemical (Jiangsu) Co., Ltd. put a 300 kt/a phenol unit located in Changshu of Jiangsu on stream in 2013 and became the biggest phenol producer in China. By the end of 2013, nine phenol producers in China used the cumin process, and the total capacity of phenol reached 1.628 million t/a. Table 1 shows the phenol producers in China.

Renovation and expansion

The phenol/acetone sector in China has developed rapidly in recent years. In addition to domestic enterprises, quite a few multinationals have constructed phenol projects in China by themselves or through joint ventures with domestic enterprises. It is expected that between now and the end of 2016, new phenol capacity in China will amount to 2.345 million t/a and the new capacity of acetone will amount to 1.385 million t/a. Table 2 shows the details.

Table 1    Capacities of phenol/acetone units in China in 2013   ( kt/a)

Producer    Capacity
of phenol    Capacity
of acetone
Changchun Chemical (Jiangsu) Co., Ltd.     300    180
Shanghai Gaoqiao Petrochemical Co., Ltd.     250    150
Sinopec/SABIC (Tianjin) Petrochemical Co., Ltd.    220    130
Lihuayi Group Weiyuan Chemical Co., Ltd.    220    130
Kingboard (Yangzhou) Shiyou Chemical Co., Ltd.    200    120
Beijing Yanshan Petrochemical Co., Ltd.     160    90
Kingboard Huizhou Chungshun Chemical Co., Ltd.     120    80
Jilin Petrochemical Co., Ltd.     83    52
China National BlueStar New Material Harbin Petrochemical Co., Ltd.    75    45
Total    1 628    977


Domestic market

With strong demand for phenol in the phenolic resin and bisphenol A sectors, phenol has long been in short supply in China. The frequent completion of new phenol units has constantly increased the output: 529 kt in 2009, up to 1.185 million tons in 2013. During these 5 years, as the output doubled, self-sufficiency went up from 49.2% to 76.7%. The import volume of phenol has fallen constantly in the past 3 years, from 762 kt in 2010 to 594 kt in 2012, and then further to 365 kt in 2013. The apparent consumption increased rapidly from 1.076 million tons to 1.428 million tons during 2009-2011, with an average annual growth of around 33%. As the financial crisis led to a slack market in 2012, the apparent consumption of phenol in the year was only 6.8% higher than 2011 and the apparent consumption in 2013 was only 1.2% higher than 2012. Table 3 shows phenol supply and demand in China in recent years.
With impacts from the global financial crisis and capacity expansion in China, price declined from the beginning of 2012 to the first quarter of 2014. The price of phenol floated in the range of RMB11 600-9 200/t from July 2012 to July 2013. Pushed by market demand, the prices slowly increased from August 2013 to the first quarter of 2014.

Table 2    New phenol units in China

Company    Location    Capacity (kt/a)    Remark
        phenol    acetone    
Sinopec Beijing Yanshan Petrochemical Co., Ltd.     Beijing    140    80    completed in May 2014
Sinopec Mitsui Chemicals Co., Ltd.     Caojing of Shanghai    250    150    startup in Dec 2014
Formosa Chemicals & Fiber Co., Ltd.    Ningbo of Zhejiang    300    180    startup in Q1 2014
CEPSA Chemical (Shanghai) Co., Ltd.     Caojing of Shanghai    250    150    startup in Nov 2014
Ineos of Britain, Yangzi Petrochemical Co., Ltd.     Nanjing of Jiangsu    400    250    startup in 2016
SinoChem International, Yangnong Group (Jiangsu Ruisheng New Material Technology Co., Ltd.)    Yangzhou of Jiangsu    240    120    startup in 2015
Xinjiang Datang Jiulong Investment Co., Ltd.     Eco-Tech-Deve
Zone of Xinjiang    100    60    startup in 2015
Qidong China Chemical Saiding New Material Co., Ltd.     Nantong of Jiangsu    125    75    starting construction in April 2012
Jiangsu Haili Chemical Industry Co., Ltd.     Yancheng of Jiangsu    360    220    under preparation
CNOOC Huizhou Refining & Chemical Co., Ltd.     Huizhou of Guangdong    180    100    startup in 2016
Total        2 345    1 385    


Table 3   Phenol supply and demand in China
Year    Output (kt)    Import amount (kt)    Export amount (kt)    Apparent consumption (kt)    Self-sufficiency (%)
2009    529    557    10    1 076    49.2
2010    688    624    40    1 272    54.1
2011    704    762    38    1 428    49.3
2012    955    594    24    1 525    62.6
2013    1 185    365    6    1 544    76.7


Table 4   Projection of phenol consumption in China in 2016

Consumption sector    Consumption (kt)    Proportion (%)
Phenolic resin    644    35
Bisphenol A    626    34
Salicylic acid    184    10
Nonyl phenol, alkyl phenol    184    10
Others    202    11
Total    1 840    100



Consumption structure

Major phenol-consuming sectors in China include the makers of phenolic resin and bisphenol A, with phenolic resin makers being predominant, taking around 43% in 2013, and around 22% going into the manufacture of bisphenol A. Bisphenol A is the fastest growing consumption sector. Other uses include the manufacture of salicylic acid and nonyl phenol. Figure 1 shows the consumption structure of phenol in China in 2013.
In next 3-5 years, the major demand for phenol in China will still arise from the manufacture of phenolic resin and bisphenol A, and the demand from bisphenol A makers will grow more rapidly. It is expected that the annual growth of phenol demand in China will stay around 6% during 2013-2016, approaching 1.84 million tons in 2016. The proportion going into bisphenol A will increase to 34%. Table 4 shows the details.

Conclusion

In the next few years, China dependence on imported phenol will decline year-on-year. The increased output and less-increased demand will cause prices to drop. Market competition will therefore be fiercer. New phenol units should employ integrated production. That is, matched bisphenol A, polycarbonate and epoxy resin units should be constructed to integrate the production of phenol and its downstream products, so as to mitigate market risks.