P.1 

OAR Box 1872 

Prepped by Keeia Richards 

Document Number: 

72) 11-1-121 

Docket Number: 

A-90-19 

Printed 11/26/2008 8:51:53 AM Sheet 72 of 204 
P.2 

SEiNT 6Y:RTP. N. C. 2770S ; 5- 3-S1 111:00AM, .rfiADfAfoCORPCRf f? I, 

t , .! ..... . I. A-90-19 

MAY 1990 i! ° EC| 8 

PnMouiEipcn-' January 1988 

PHENOL 

. . / 

FOCUS....Phenol is the feedstock for phenolic resins, bisphenol A, end ceprolectem. Other significant 

derivatives include alkylphenols, adipic acid, aniline, and plasticizers. Most consumption or phenol 

depends on requirements by the construction and transportation industries, particularly housing and automotive. The largest use for phenolic resins is for edhesives for plywood and composition boards used in 

construction. Phenolic resins are sleo used es binders for fiberglss, mineral rooi, and other insulation. 

Bisphenol A (BPA) is a raw materiel for polycarbonates, epoxies end other resins. Rapidly growing polycarbonate applicaliune are inulJiny coMpounde and eheeliriy used in automotive, appliance, electronic, glazing, 

end other uses. Ceprolsctsm is polymerized to nylon 6, a polyamide used for fibers (particularly carpet 

y_rn), plastic, films, and engineering molding compounds. Only Allied-Signal useB phenol as e ran meteriel 

for esprolactam. Other ceprclactam producers start with cyclohexane. 

Since 1985, US demand for phenol haa been growing et about a 72 per year rate, led by 10-1 SS per year 

growth in -iephenol A, the second lergest use for phenol. Despite sluggish housing starts for the pest 

several years, phenol uee in wood products hes still shown at least modest growth on the order of 2-32 per 

year, as the housing industry haa been supported by healthy growth in home improvement and remodeling. 

OUTLOOK....For the longer term, US annual consumption of phenol will probably increase et en everege rate 

of 2-3S, after dropping somewhat in the 1990 economic elowdown. Although phenol requirements for phenolic 

resina have moderated, there will be steady long term growth in phenol consumption for bisphenol A (BPA), 

the next lergest derivative. 

Polycarbonate reslne, with a feet growth pattern, are now tho insjur derivative of bisphenol A. Eooxiee 

had been the main outlet, fcny applications for epoxy re6ins in protective coatings and adhesives have 

matured. Ths reduced epoxy rasin growth in these mature end uses has not, however, been offset by the 

Ki^hcz ^roitLK caL«. t„z fcl«c tr ic*l/'ol« c I r enic applicottorvo. Cf*A gr*—fch ihor.f.r . 4*^*rvW« »«»P*1, . •** gr*«fcl</ 

expanded use of polycarbonates and some specialty resins. In addition to BPA, 2,6 xylenol, used to meke 

polyphenylene oxide engineering plastic, will hevs expended markets. However, 2,6 xylenol is s relatively 

minor derivative, currently accounting for no more than 5!» of total US phenol consumption. 

Unless there is e sharp rebound in the value of the US dollar, exports of phenol and derivatives 

should continue etrcng even with a major downturn in the US economy in 1990, elthough 1990 exports are 

expected to moderate some from previous years in line with general world-wide economic sluggishness. 

PRICING....With relatively weak demand and competitive prices, many phenol producers reportedly had losses 

for several years prior to 1987. With strong demand increases, rising feedstock benzene prices and developing supply tightness, phenol selling prices escalated rapidly into ths 42-48 certs per pound rsnge. Mid1989 contract prices settled in the Zt4-46 cents per pound range before falling several cents by year end 

in reepense to moderating demand. Despite wild fluctuations in raw material benzene prices, phenol pricing 

has become more respcnelve to supply/demand balance coneideretione. Pricing in early 1990 has therefore 

been reflective of weakening demand, falling into the 33-37 cents per pound range. With supplies seemingly 

assured over the next several years, phenol pricing may be expected to be more responsive to raw material 

pricing, and ae such should rise somewhat as hydrocarbon values in general are expected to exhibit e 

rieing trend. 

AVERAGE PRICE RANGE - PHENOL - SYNTHETIC 

Cents Per Pound - Bulk - Freight Equalized 

Trade Llet 

Avg. Sales 

1960 

14.75 

14 

UPPLY A.SC DEhVWD.. 

Capacity 

Production 

Imports 

Exports 

Dom. Demand 

1960 

n/a 

772 

48 

724 

1965 

J7TT 

9 

1970 

EOT 

7 

1975 

TT 

26 

..Millions of Pounds... 

1965 

T53T 

1173 

11 

1162 

1970 

T7TI 

1755 

50 

1705 

1975 

2.97 

1746 

25 

51 

1720 

1980 1985 

36 

30 

.Estimated 

T T 

28 

1986 

32 

19 

....Domestic US 

1980 1985 

T)TZ 

2567 

- -

299 

2268 

TTSi 

2841 

59 

141 

2759 

1957 

42 

29 

1988 

T T 

36 

1989 

TT 

36(E) 

1586 1987 1988 1989 

TTtit 

3115 

11 

188 

2938 

3426 

3340(E) 

8 

185 

3163 

53T? 

3562 

32 

192 

3402 

337J 

« 

• 

« 

3640(E)* 

15 

202 

3653 

• 

• 

« 

• PR0JE 

1990 

"7T 

32 

CTED • 

1992 

TBT 

35 

* PROJELILU • 

1990 1992 75T5 

38C0 

10 

140 

3670 

irro 

4000 

AVAILABILITY....For the past three years US phenol production hee been at or greater then apparent eepacitv. Nameolete ceoecitiaa may be sliohtly understated, but in reality, with very strong demand. US producers have been eele to r»Ji their plente et rates in ssoese of design-,—althougn generally at the—sacrifice uT ovtieUuleU maintenance Uwwnllmo. Thia heavy tunning 10L0 is enyecleU lu toko ilo lull in ui.OA^OI.LcJ 

outages due to equipment failure over the next yesr or eo. Even with the scheduled edditione to capacity 

through 1991, the US supply/demand balance ia expected to remain tight. Major capacity additions for 1992 

and beyond can help to alleviate any supply problems. 

Export aalea opportunities may lessen near term es new capacity is built overseas. Phenolchemie in W. 

Europe, Rhedie in Brazil and Nippon Steel in Japan ere adding world-ecsle plents over the next three 

yeers. Many of ths major phenol pr>ducere srs either integrated backward into cumene, or have a close 

working reletionehip with cumene producers. Cumene producers generslly make benzene captively end have a 

source or propylene. Phenol producers that ere not integrated backward continue to work toward improving 

finaiHnn . A* an a-«mn1a, in lat a ]<JR7, r.anarol rlirtrir Pn. . a phannl prnrfupar. mnri Phamp1ir> Petroleum 

Co., s feedstock cumene producer entered into a 5C-50 Joint-venture agreement, Mt. Vernon Phenol Partners, 

which could help to etebilize feedstock coats end provide a basis fcr expended cepacity. 

12/67 
P.3 

SENT BY:RTF. N.C, 27705 ; 5- 5-51 ;ii:Q1AM I RADIAN CORPORATION-* 

PRODUCERS AW CAPACITIES - PHENOL - MILLIONS OF POINDS 

PRODUCER 

Allied-Signal 

Aristech . 

BTL Specialty Resins Corp. 

Dow Chemical USA 

Georgia Gulf 

Kalama Chemical 

Mt. Vernon Phenol Partners 

Shell Chemical 

Texeco Chemical 

Other* 

215 643 27721*25 

LOCATION 

Frankford, PA 

Haverhill, OH 

Blue Island, IL 

Fresport (Oyster Creek), TX 

Plaquemine, LA 

Kalama, WA 

Mount Vernon, TN 

Deer Perk, TX 

El Dorado, KS 

Various 

1990 CAPACITY 

750 

630 

90 

550 

360 

75 

640 

600 

95 

40 

TOTAL 3830 

Baaed on announced capacities and trade estimates, first quarter 1990. (*) Estimated capacity in 

place wherB several companies recover natural phenol frcm petroleum operations. Dakota Gasification 

is building a recovery plant et ths Great Pleins Synfuele plant near Beulsh, ND, with an estimated 

capacity of 40 million pounds per yeer, to be on stream by year end 1990. 

Georgia Gulf has about completed the move to Pasadena, TX of the company's 160 million poind Bound 

Brook, NJ plant. Restart of thia plant ia expected by June 1990. The Bound Brook plant wee sold to the 

then Georgia Pacific by Union Carbide in 1982. After running briefly in 1963, Georgia Gulf resumed full 

production et Bound Brock in early 1986. In 1967 Georgia Gulf again suspended production due to poor 

economics. Mt. Vernon Phenol Partner is the joint venture fcrmed by General Electric (the originel 

plant owner/operatcr) with Chemplin Petroleum Co. JLM Industries, s CT-based chemical marketing firm, 

also has a small equity share in this project. BTL Specialty Resins is considering a doubling cf their 

capacity, to be on stream by the end of 1992. Aristech and Shell ere each studying 500 to 600 million 

pound US Gulf Coast phenol units which would start up no earlier then 1993. 

END USES....Phenol, elso known as carbolic acid and mcno-hydroxybsnzene, is supplied commercially as pure 

pnenoi and as 90/10 phenol/water. Pure phenol is a colorless to light-pink solid et ambient temperatures! 

thue phenol ia normally sold in bulk quantities in a heated liquid state. The primary chemical intermediates and derivatives of phenol induce phenolic resins, bisphenol A, ceprolectem, alkylphenols, 

adipic ecid, 2,6 xylenol, plasticizers, and salicylic acid, among others. 

Phenolic resine, the largest derivative, are the condensation product of phenol or substituted phenol 

with an aldehyde, particularly formaldehyde. The largest use of phenolic resins ie for adheaivea (plywood), followed by binders for insulation (fiberglaes, mineral wool, etc.), impregnating and laminating 

agents (for plastic and wood laminates), end for molding compounds and foundry resins. 

Bisphenol A (BPA), the second lergest but fastest growing derivative, is produced by reacting phenol 

with ecetene. BPA is meinly used to make epoxy end polycarbcnate reeine. Smaller amounts of BPA are used 

to produce phenoxv, polysulfone, and polyester resins. Allied-Signal, Inc. is the only esprolactam producer using phenol to make caprolectam. Allied uses ceprolectem to make nylcn-6 fibers, molding reein or 

film forma of the plastic. Of the significant alkylphenols, nonylphenol is used as s surfsce active agent, 

emulsifier, antioxidant, and as s lube oil additive. Adipic acid, used to make plasticizers, resins, and 

aynthetic lubricants, is produced by hydroganating phenol to Cyclohexsnol which ia then oxidized with 

nitric acid to adipic acid. USS Chemical a (Aristech) stsrted to make aniline from captively-produced 

p*ir,ol in 1982. 

Of miscellaneous epplicetions, 2,6 xylenol is used to make polyphenylene oxide (PP0). General Electric, with Noryl (trademark), ie the 6ole US producer of 1,6 xylenol for PP0 engineering plaetiee. For the 

minor phenol derivative, pentechlorcphenol, environmental concerns continue to restrict consumption) 

elthough it is still the preferred treatment chemical for preservation of utility poles. 

END USE PATTERN - 1989 ESTIMATE 

DERIVATIVE 

Phenolic Reeins 

Biephencl A 

Caprclactero 

Xylenola 

PERCENT 

— J 3 

30 

16 

5 

DERIVATIVE 

Alkylphenole 

Aniline 

Miscellaneous 

PERCENT 

4 

3 

4 

MANUFACTURING....Most phenol is produced by the cumene hydroperoxide process. Kalana Chemical, with leas 

than 3JJ of US phenol capacity, is the only US producer that does not utilize cumene ae the raw material. 

Kalama employs a toluene oxidation prccess. In the cumene hydroperoxide process, benzene end propylene ere 

reacted to form cumene (iscpropylbenzene). Cuirene ie then uxidiiaJ niUi air enc the resulting cumene 

hydroperoxide is concentrated and then deccmcoeed cr cleaved with 8Cid to yield phenol and acetone. After 

reecticn, tne catalyst ia removed, the cleavage mixture ie fractionated and the products are purified. 

In the teluere-oenzoic process, toluene is 0x1012.3 to Sen.file ield. The acid is then oxidized to 

phenol. Kalama also isolates benzoic. The toluene-benzoic acid process does not generate acetone ccproduct. At one time, the hydrolysis of chlorcbenzene wes the leading commercial phenol process. In 1975, 

Dow shut dewn the last US plant utilizing this route. In 1978, Reichhold discontinued phenol production by 

a benzenesulfonic acid fusion process. Some phenol is recovered front petrcleun and coal tare. 

ENVIRONMENTAL ASPECTS....Phenol ie corrosive to body tissues. Poisoning may occur by skin absorption, 

inhalafian. or inoeation, Liver deneoe>*ne discoloration of akin mav reaultt The recommended 1989/1990 

ACGIH threshold limit value {ekmT ie irppm. The sweet odor of phenol usually csn be detected in eoncentrstion of 0.3 ppm, thus providing a good wsrning. Tests ere being conducted to determine whether squeoue 

phenolic waste solutions can be detoxified through biodegradation. 

To the best of our knowledge, the information cor.teined herein is accurate. However, we 

do not assume any liability whateoever fcr the completeness or accuracy of thiB report.