Quarterly Update on Global Cumene Market
For the Quarter Ending June 2021
In the second quarter of 2021, Cumene supplies in North America improved owing to the pick-up in manufacturing activities after the industry recovered from the devastating impacts of the polar winter storm Uri. Several manufacturing facilities ramped up the production rates along with strong enquiries from the Phenol manufacturers. Downstream demand remained robust amidst seasonal hike in enquiries for Cumene derivatives from the building and construction sector. Taking cues from the global surge in raw material rates, the prices gained in the first half and then stabilized in the latter half of the second quarter. Cumene FOB Texas discussions were heard around USD 1810 per tonne in June.
The Cumene demand outlook in Asia Pacific region showcased mixed sentiments during the second quarter of 2021, as several downstream Phenol manufacturing units were on a turnaround during the May-June period. The turnaround of South Korean Kumho P&B line 3 and Mitsui Chemical’s Phenol unit in Japan proportionally impacted the offtakes of the Northeast Asian region. Whereas despite the second wave of COVID in India, the Cumene market remained balanced. Cumene prices in India maintained an uptrend, with price discussions in June hovering around USD 1292 per tonne.
During the second quarter of 2021, Cumene supplies in the European region remained tight due to turnarounds at several manufacturing facilities in the first half of the quarter. However, several plants resumed operations with better rates in the later half due to rising import demand from the US. Downstream demand observed marked uptrend from the construction sector which led to surge in offtakes from the paints and coatings industry. Cumene prices showed strong gains during the quarter buoyed by the tight supply and global inflation in upstream Benzene.
For the Quarter Ending March 2021
During the first quarter of 2021, Cumene supplies were tight, however during the first half of Q1 the market lost balanced in all prospects due to the severe freeze weather conditions in the US gulf region led to the plant outages is several major facilities, triggering supply shortages of feedstock Benzene. The demand of Cumene slumped amid the damages occurred in plants due to the polar winter storm which shut down several Phenol and Acetone units for several weeks in a row. The spot buyers struggled in strong competition to procure Cumene stocks in domestic as well as overseas market in middle of surged prices in the North American region.
The supplies in Asia Pacific, during the first quarter remained tight since several major plants went for maintenance turnaround and were operating at low efficiencies due to feedstock shortages. ENEOS Corp production plant in the Miyagi prefecture, Japan shut down its aromatics unit for several weeks due to the 6.1 magnitude earthquake in February, followed by the low inventories levels after some plants went for turnaround during the Chinese lunar new year holidays. The demand was driven by the restocking practices to fill the inventories, followed by surged consumption from the Phenol-Acetone manufacturers. High demand and sluggish supplies throughout the quarter hiked the prices of Cumene in India which were assessed around USD 1202/ton.
The supplies of Cumene in the European region remained constrained in first half of Q1, as the several plants reduced their production due to the limited availability of the feedstock as the industrial and commercial activities were restricted amid the lockdown in several region. The supplies were further dented by reduced imports from the USA due to plant outages in several producing facilities. The demand however surged from the downstream sector as the Borealis acetone and phenol unit ended their turnaround during ending of previous quarter. Widened supply-demand gap led to surge in the prices of Cumene throughout the European region.
For the Quarter Ending December 2020
Cumene supply remained balanced in the fourth quarter of 2020, pressured under subdued demand from the downstream Acetone and Phenol manufacturers. However, prices showed a significant QoQ rise with escalating crude futures and rising optimism over the news of roll-out of Covid-19 vaccines and an anticipated economic rebound in China and India. An upward pressure on the pricing curve was further supported by raw material pass-through following a net increment observed in feedstocks Benzene and Propylene. Ex-Depot prices in India jumped from USD 1049 per tonne levels in October to USD 1090 per tonne levels in December. Supply remained short in South Korea as LG Chem shut its 400 KTPA Cumene plant after its Yosu cracker complex caught fire early in November.
Production rates showed slight recovery from the spate of seasonal Hurricanes and pandemic-induced lockdowns. Outlook remained hindered due to soft demand for the derivative Acetone while Phenol derivatives awaited the much-needed revival in the key automotive and construction sectors. While demand outlook remained stable for largely the entire quarter, Cumene supplies were largely affected by constraints from the upstream refinery-grade propylene (RGP) and Benzene. Prices reported an uptrend on the back of strong Benzene due to a range of factors, including low imports from South Korea and depressed refinery operating rates. Major US producers of Cumene are CITGO, INEOS Phenol, Marathon and Shell.
As the economic recovery took hold in Europe during Q4, Cumene demand witnessed considerable growth. However, import volumes remained restricted, refraining to show any major movement before the first quarter amid rising fears of extended lockdowns over the new coronavirus variant. Sentiments were risen as the news of vaccine distribution hit the downstream markets. Supply lengthened by the end of the quarter as Borealis declared force majeure at its Phenol and Acetone production site in Finland. With no major turnarounds expected in the Cumene production units during the first half of 2021, the European Cumene market is likely to stay amply supplied in the near term.