Acetone          

*Millions of pounds per year of acetone. More than 90 percent of US acetone is produced as a coproduct with phenol through cumene peroxidation in the manufacture of phenol. About 0.62 pounds of acetone is produced per pound of phenol.

Ineos PLC purchased Phenolchemie with its acetone plant in Theodore, Ala., from Degussa-Hüls in May 2001. At the end of 2002, another 55 million pounds of capacity were added as the result of a phenol production expansion, raising the annual acetone capacity to 605 million pounds.

Frontier Oil Corporation acquired the El Dorado, Kansas refinery with its acetone capacity in 1999, from Equilon. In 2002, Frontier decided to withdraw from the petrochemicals business in order to concentrate on its oil refining operations and eliminated 65 million pounds of acetone capacity at El Dorado.

Because of diminished phenol demand, in 2002 Georgia Gulf mothballed its smaller plant at Pasadena, Tex., thereby temporarily removing 95 million pounds of acetone capacity from the marketplace. The plant will be down indefinitely, until market demand for phenol improves.

Sunoco acquired Aristech Chemical from Mitsubishi Corporation in January 2001, and along with it, the acetone unit in Haverhill, Ohio. Aristech had previously completed a phenol/acetone expansion in the fourth quarter of 1999, raising the acetone capacity at Haverhill to 590 million pounds.

Dow Chemical Company acquired Union Carbide Corporation in February 2001, and with it, the acetone production facility in Institute, W. Va. The plant produces acetone by dehydrogenating isopropyl alcohol shipped from Dow’s Texas City, Tex., plant.

The Mount Vernon Phenol Plant Partnership was established in 1987, with GE holding 49 percent; CITGO Petroleum, 49 percent; and JLM Industries, 2 percent. GE Plastics operate the plant and JLM Industries manage all merchant sales.

Profile last published 4/5/99; this revision 4/28/03.

DEMAND
2001: 2,603 million pounds; 2002: 2,621 million pounds; 2006: 2,895 million pounds, projected. Demand equals production plus imports (2001: 25 million pounds; 2002: 84 million pounds) less exports (2001: 512 million pounds; 2002: 560 million pounds).

GROWTH
Historical (1997 - 2002): 0.9 percent per year; future: 2.5 percent per year through 2006.

PRICE
Historical (1997 - 2002): High, ¢20.75 per pound, contract, Gulf Coast, barges, MMA grade; low, ¢11.00, same basis. Current: ¢20.00 to ¢22.00 same basis.

USES
Acetone cyanohydrin for methyl methacrylate (MMA), 42 percent; bisphenol-A, 24 percent; solvent uses, 17 percent; Aldol chemicals (MIBK and MIBC), 13 percent; miscellaneous, 4 percent.

STRENGTH
Worldwide MMA demand recovered in 2002, driven by increased demand for polymethyl methacrylate (PMMA) used by the construction industry in place of glass where shatterproof protection is required. MMA demand, acetone’s largest application segment, should grow at slightly better than 3 percent in North America as the economy improves.

Bisphenol-A, acetone’s second largest application segment, has more than doubled its consumption during the past decade, driven primarily by heavy demand for polycarbonate resins, most notably in automotive applications. Optical media, including audio compact discs (CDs), CD-ROMs, recordable CDs and digital versatile disks (DVDs) is another large segment that is doing well for bisphenol-A due to polycarbonate resins demand. Bisphenol-A is growing at nearly 7 percent annually.

WEAKNESS
Economic activity greatly affects acetone’s demand. Acetone’s demand (as for phenol’s as well) is heavily dependent on automobiles, construction and the electronics businesses. As such, the economy’s decline in 2001 caused a major dip in demand for acetone. Acetone’s one year performance between 2000 and 2001 was a negative 9 percent! The following year, 2002, saw generally flat demand for acetone, which might be interpreted as a bottom or turning point for acetone and the general economic health as well.

OUTLOOK
Acetone became tight during last year’s fourth quarter. There was a three-month outage at the Ineos plant in Theodore, Ala., due to a fire there, and plant shutdowns by Frontier at El Dorado, Kans., and Georgia Gulf at Pasadena, Tex. All together, these events suddenly removed nearly 20 percent of the industry’s capacity. Pricing subsequently increased to where it is currently about seven cents per pound above last year’s average for MMA grade. Pricing is expected to remain at this level well into 2003, until the demand for phenol improves and thereby stimulates increased byproduct acetone production. Growth over the forecast period is estimated to be 2.5 percent annually.

HISTORICAL DATA