Economic Aspect

Table 4 shows the world wide and US production figures and prices for phenol since the mid-1980s. Because the cumene process accounts for more than 95% of the worlds phenol supply, the economics of phenol production are closely tied to this production method. In the cumene process 615kg of acetone are coproduced with each ton phenol produced. Thus, the economics of phenol production are influenced by acetone (qv). Worldwide, approximately 85% of acetone is produced as a coproduct with phenol. The remaining 17% is produced by on-purpose acetone such as the hydration of propylene to 2propanol and the dehydrogenation of 2-propanol to acetone. The cost of production of 2propanol sets the floor price of acetone as long as the acetone demand exceeds the coproduct acetone supply. However, there is a disparity in the growth rates of phenol and acetone, with phenol demand projected at 3.0%/yr and acetone demand at 2.0%/yr. If this continues, the coproduct supply of acetone will exceed the total acetone demand and onpurpose production of acetone will be forced to shut down; the price of acetone is expected to fall below the floor price set by the on-purpose cost production. Projections indicate that such a situation might occur in the world market by 2010. To forestall such a situation, companies such as Mitsui Petrochemical and Shinnippon (Nippon Steel) have built plants without the coproduction of acetone. The key elements of the cost of production of phenol are feedstock cost and capital cost. For phenol produced on the US. Gulf Coast in a 200,000t/year phenol plant built in 1994, the cumene feedstock cost represents 70% of the net cost of production, after allowance for acetone coproduct value. Depreciation of equipment represents 14% of the net cost and utilities approximately 7.6%. The remaining 8.4% covers all other expenses, including plant labor, maintenance, insurance, administration, sales, etc.

Year 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994a a Values are estimated 1310 1290 1413 1520 1615 1619 1605 1587 1694 1610 1646

Phenol consumption, t/yr US. Worldwide

US. Price ,/kg

3728 4001 4289 4495 4289 4352 4476 4477 4691

60 99 96 101 77 58 66 70 74