All categories
43

The Development Trend of Phenol Ketone Industry under High Expansion Cycle

2023/9/1

Phenol ketone is an important organic chemical raw material, widely used in fields such as pesticides, pharmaceuticals, dyes, plastics, etc. Since 2019, the world has embarked on a new round of phenolic ketone expansion cycle, with multiple phenolic ketone units put into operation in 2023, resulting in a situation of oversupply and increasing competition in the phenolic ketone market. Please pay attention to the phenolic ketone industry and market development trends reported in this edition.

In 2023, the global petrochemical industry is slowly recovering. After China fully relaxed its epidemic prevention and control policies, the chemical industry market experienced a rebound after the year. However, the recovery of downstream industries was not as expected, and demand was sluggish. After April, the industry entered a difficult period again, with widespread losses. At the same time, multiple sets of phenolic ketone plants were put into operation in 2023. In the situation where the supply speed is far greater than the downstream consumption growth rate, the imbalance between supply and demand has intensified, and the industry has experienced frequent parking and load reduction. Although the domestic petrochemical industry is expected to experience an overall recovery in the second half of the year, the phenolic ketone industry still faces huge challenges and the profit situation is not optimistic. It is expected that the severe imbalance between supply and demand in the phenolic ketone industry will continue until after 2027.

Explanation of Terms

Phenol, also known as carbolic acid, has a molecular formula of C6H5OH. In 1834, German chemist Runge first isolated crude phenol from coal tar, and humans began to recognize phenol. In 1923, phenol was first synthesized. Various synthesis methods have been used in industry, including sulfonation, cyclohexane, toluene oxidation, and cumene method. Currently, 99% of phenol worldwide is produced using cumene method. Phenol is almost entirely used as a chemical intermediate product, mainly used in the production of phenolic resin, bisphenol A, caprolactam, alkylphenol, aniline, and as a raw material for fine chemicals such as dyes, pharmaceuticals, explosives, pesticides, etc.

Acetone, also known as dimethyl ketone, with the molecular formula C3H6O, is the simplest saturated ketone. The production processes mainly include fermentation method, isopropanol method, direct oxidation of propylene method, isopropyl benzene method, and acetylene water method. Currently, 98% of acetone in the world is co produced with phenol using isopropyl benzene method, producing approximately 0.62 tons of acetone per ton of phenol produced. Acetone is mainly used as a solvent in industries such as explosives, plastics, rubber, fibers, leather making, oils, and paint spraying. It is also an important organic synthesis raw material and an important raw material for the production of bisphenol A, methyl methacrylate (MMA), methyl isobutyl ketone (MIBK), and isopropanol.

The duration of this round of expansion cycle is long

Since 2019, the world has embarked on a new round of phenolic ketone expansion cycle, with production capacity mainly coming from Northeast Asia. This round of production capacity deployment has two characteristics. Firstly, it has a large scale of deployment, with an additional production capacity of over 6.5 million tons/year from 2019 to 2025, far exceeding any previous deployment cycle in history; The second reason is that the peak duration is long, with a period of 5-6 years before and after, and the peak production capacity investment in history is generally 2-3 years. It is expected that the current expansion cycle will end in 2025.

● The production capacity is mainly concentrated in the East China region

Distribution of Phenol Acetone Production Capacity in China

The production capacity of phenolic ketones is mainly concentrated in East China, followed by North China and Central South regions. In 2022, the proportion of production capacity in East China in the country has increased from 63% in 2019 to 76%. In the future, with the production of new projects in the Northeast and Central South regions, the proportion of production capacity in East China will decrease, but it will still occupy the top position in the country. In 2025, the production capacity in East China will account for about 60% of the country.

From a specific province perspective, Zhejiang and Jiangsu provinces are the main provinces in China that produce phenolic ketones. In 2022, the production capacity of the two provinces was 1.955 million tons/year and 843000 tons/year, respectively, accounting for 28.9% and 12.5% of the national total. With the production capacity of 800000 tons/year in the first and second phases of Zhejiang Petrochemical, Zhejiang Province has become the province with the largest scale of phenolic ketones in China. In the next three years, Jiangsu will increase production by 1.3 million tons per year, accounting for approximately 25.8% of the country's newly added production capacity. This will also make Jiangsu Province surpass Shandong and Shanghai in 2023, becoming the second largest province in China's phenol ketone production.

Private enterprises become the main force in the market

With the lowering of investment barriers in the petrochemical industry, the trend of diversification of investment entities in the domestic phenolic ketone industry is evident. The share of private and foreign enterprises in the domestic market is gradually increasing, and their influence is constantly expanding. Around 2000, Sinopec and PetroChina were the absolute mainstays of the domestic phenolic ketone industry, with a total production capacity of about 90% of the country, while private enterprises only accounted for about 6%. Over the next 20 years, foreign-funded enterprises such as Huizhou Zhongxin and Xisa Chemical have gradually entered the market, as well as private enterprises such as Lihuayi and Zhejiang Petrochemical have joined the competition. By 2022, state-owned enterprises, foreign-funded enterprises, and private enterprises will be almost one-third of the world. In the coming years, with the large-scale production of phenolic ketone plants by private enterprises such as Shenghong Refining and Chemical, Dalian Hengli, and Jiangsu Ruiheng, it is expected that by 2025, the phenolic ketone production capacity of private enterprises will account for over 45% of the national market share, becoming the main force of market competition.

Under high supply, industry profitability is not optimistic

With the rapid expansion of phenol ketone production capacity in China, the supply pattern of phenol ketones has changed, from insufficient supply to oversupply, and the operating rate has significantly decreased. At the same time, the supply growth of upstream raw material pure benzene is limited, the gap is constantly widening, and prices are fluctuating and firm; The main downstream bisphenol A has rapidly expanded its capacity, with a clear trend of overcapacity. The industry continues to suffer losses, and its support for the price of raw phenolic ketones is limited. Under the influence of high costs and imbalanced supply and demand, the profits of the phenolic ketone industry have been continuously narrowing. In 2022, there have been serious losses, and many enterprises have voluntarily stopped or reduced their losses.

Taking into account factors such as raw material prices, costs, and supply-demand balance, the market for phenolic ketones has limited upward space in the second half of 2023, and the market will continue to suffer losses or be near breakeven. Parking maintenance or load reduction operations by enterprises may have a certain upward effect on short-term market prices.


JIN DUN CHEMICAL has built a special (meth) acrylic monomer manufacturing base in ZHEJIANG province. This makes sure the stable supply of HEMAHPMAHEAHPAGMA  with high level quality. Our special acrylate monomers are widely used for thermosetting acrylic resins, crosslinkable emulsion polymers, acrylate anaerobic adhesive, two-component acrylate adhesive, solvent acrylate adhesive, emulsion acrylate adhesive, paper finishing agent and painting acrylic resins in adhesive.We have also developed the new and special (meth) acrylic monomers and derivatives. Such as the fluorinated acrylate monomers, It can be widely used in coating leveling agent, paints, inks, photosensitive resins, optical materials, fiber treatment, modifier for plastic or rubber field. We are aiming to be the top supplier in the field of special acrylate monomers, to share our rich experience with better quality products and professional service.