Published October 2016
Over the past few years there have been some shifts in the global phenol industry and change is predicted to continue through the forecast period. Some of the larger and more advanced regions have been impacted by the increase in Asia-based supply, which has caused changes in global trade patterns. However, much-needed capacity rationalization was seen in North America. Between the new Asian capacities and shutdowns in North America, the global phenol industry is left with an oversupply, low operating rates and a consumption forecast that indicates it will not be possible to close the gap. In the next five years, global phenol capacity is expected to increase by a total of 12%, with Northeast Asia accounting for about 72% of this capacity increase, to raise its share of total global capacity to 46% in 2020.
Northeast Asia and the United States dominate phenol production, together accounting for 65% of the global total in 2015. During the next few years, facilities are scheduled to be brought onstream in China, South Korea, India, Saudi Arabia, and Thailand; most of this new production will flow into China, to satisfy the quickly growing market. Overall, phenol production has increased at an average annual rate of 1.8% since 2010. Production growth is expected to increase at a higher average rate of 2.7% per year.
The following pie chart shows world consumption of phenol:
The global phenol industry continues to be driven by demand for bisphenol A (BPA), which accounted for 47% of the global consumption. In 2015, nearly half of global phenol demand for BPA was in Northeast Asia. Increased demand and capacity for BPA will result in strong demand for phenol in Asia. Phenol consumption for BPA will continue to maintain a healthy growth rate of 3% per year. BPA is driven by Polycarbonate (PC) demand, which has consistently been above GDP levels. PC demand is expected to rise by 2.9% per year through the forecast period, which will in turn continue to drive the growth of BPA.
Phenol-Formaldehyde resins (PF resins) are the second-largest end use for phenol and are used mainly in the construction industry. In 2015, demand for PF resins accounted for 28% of total phenol consumption. Nylon–KA oil is the third-largest demand sector, tied with BPA for the highest growth rate at 3% per year over the next five years, all global demand sectors will have positive growth in the forecast period.
Demand for BPA, Phenol-Formaldehyde (PF) resins and other markets for phenol is greatly influenced by general economic conditions. As a result, consumption of phenol largely follows the patterns of the leading world economies. BPA and PF resins are produced in all regions, production of BPA is more prevalent in developed economies. However, there have been recent investments in BPA facilities and others are planned in developing regions where demand has surged in recent years. Phenol consumption for caprolactam (an end use for nylon–KA oil) is limited mainly to the United States, Western Europe and Japan.
The strongest consumption growth is still to be found in the Asia Pacific region. Since 2012, phenol consumption in Northeast Asia has grown and is expected to continue to increase. Growth in North America and Western Europe remains difficult to achieve. Over the forecast period, North American demand will remain completely stagnant, while Western European consumption will continue to contract at a slow pace. South American consumption is expected to grow from a very low base, however, this growth will be dependent on political issues in Brazil.
The Middle East will have strong consumption growth, driven by production of BPA, which is being produced primarily for export to other regions. China will have the fastest consumption growth over the next five years, increasing at an average annual rate of 11.5%. India will be a very close second in terms of demand growth, with phenol consumption increasing at an average rate of 7.7% per year over the next five years. Imports into India have also grown significantly, at 16% per year over the past five years.
Overall, global phenol consumption will grow at slightly over 2.5% per year during the next five years.