Chapter 2

2.1 Introduction

This chapter will discuss regarding the market trends of the production of

cumene and their respective material needed for the production of cumene. This chapter

is discussed to ensure the production of cumene will always ensure that the company can

gain benefit from the production and survive through to the end of the period.

In this chapter, the parts will be divided into 4 parts namely the global market

trend, Asia market trend, market supply of raw material and the rate of production of

cumene. In the global market trend, the world demands and the production is analysed

and searched while on the Asia market trend, the demand and the production of the

cumene along the Asia region is determined using other big company as the basis. Then

in the third part which is the market supply of the raw material, the amount of raw

material produced and their availability on their region is analysed. Then on the last

part, the production rate is determined that can allow continuous production of the

cumene.

2.2 Global Market Trend

Cumene is widely used for the production of phenol, acetone which consumes

about 98% of the cumene produced in the industry. Hence, cumene market demand is

very dependent on the market of phenol and acetone. Globally the cumene market was

valued at $15,466.1 million in 2012 and expected to reach up to $24,129.06 million in

2018 (Micromarket Monitor, 2017). This is due to the growth in market of the epoxy

resins, polycarbonates demand and etc. that is the end product of phenol and acetone in

which drives the demand of cumene. Other than that, the uses of cumene as a blending

in the gasoline pool slightly affect the demand of the cumene globally. It is used to avoid

benzene restrictions in gasoline as it has a high octane rating (HIS Markit, 2016).
 The demands of cumene globally are dispersed to 3 main region which is in the

Europe, America and Asia. Among the cumene demand of the region, Asia is the largest

region that requires highest demand of cumene taking 43% of the world cumene

demand. The second largest continent that has a high demand of cumene is the North

America and Western Europe each demanding 22% of the world cumene demand. The

Figure 2.1 below shows the distribution of the market demands of cumene globally.

Figure 2.1: The distribution of the global cumene market demand (HIS Markit, 2016)

In Europe, the leading cumene demand includes the fast developing country such

as Germany, Belgium, France, Italy, Spain and etc. Among all the developing country,

Belgium leads the cumene consumer with 28.9% of the total cumene supplied to the

Europe region which is valued at 3,785.63 KT in 2012. The trends of cumene demand in

the Europe section is also expected to increase at a rate of 4.1% from 2013 up until 2018

(Micromarket Monitor, 2017). Then, the second largest demand of the cumene in the

Europe section is followed by Belgium. In the North America region, United States of

America has the highest cumene consumption taking about 98.8% of the cumene

demand for their region. The estimated amount of cumene demand for the North

America region reaches up until 3364.37 KT.

 As mentioned in the early parts, most of the cumene produced in this world are

contributed to the production of phenol and acetone. The Figure 2.2, 2.3 and 2.4 below

shows the phenol supply and demand throughout the year according to their region. The

figure of phenol demand increases throughout the year up until 2016 and has been

increasing in a stable pattern whether it is in the Europe, North America and North

Asia. This is due to the advancement of technology that uses the phenol as bisphenol-A,

phenolic resins and etc.

Figure 2.2: European phenol supply and demand

 Figure 2.3: North America Phenol supply and Demand

Figur

e 2.4: North Asia Phenol supply and demand

The Figure 2.5 and 2.6 below shows the distribution of phenol and acetone

applications for their end product. For phenol, the most products produced is the

bisphenol-A which takes 43% of the total world phenol consumption followed by the

phenolic resins with 30%. As for the usage of acetone, the distribution is more even with
small different between its application with usage as a solvent taking the highest

percentage of acetone consumption at 29%.

Figure 2.5: Phenol applications globally

Figure 2.6: Acetone applications globally

2.3 Asia Market Trend

Asia is the region where most of the cumene demand is from with around 43% of

the world cumene demand. The demand of cumene is especially rising in the Asia-Pacific

region that accounts 35% of the cumene demands globally where the cumene is used for

the production of plastics, composites, laminates and other industries. Along the Asia
region, Taiwan is the highest consumer of cumene with 25.4% from the total cumene

demand in Asia followed by Japan, China and South Korea. However, the demand is

expected to keep increasing and one of the fastest expected growing market demand is

India (Grand View Research, 2017). The demands in Asia are increasing due to the

trend of using heavy feedstock including benzene instead of lighter naphtha. In China,

the cumene demand is increasing from the growing number of aromatic facilities that is

produced from the acetone and phenol and hence affecting the demands of cumene.

Other than that, the applications of product of phenol such as bisphenol-A in industries

that produces water bottle, DVD and CDs, sports equipment also increases the market

needs of the cumene as an intermediate product to produce the high end quality

product.

To fulfil this market needs the production of cumene has been increased and thus

increases the production of cumene. There are various company that take the

opportunity to increase their cumene production and some new companies that start to

establish new plant for the purpose of cumene production. Among the companies that

produces cumene, SABIC is one of the main company that produces cumene and uses it.

It is one of the largest cumene production plant in Saudi Arabia. Before the

advancement of technology, cumene is extracted from the crude oil however, with the

advancement of technology the cumene is now produced synthetically. The plant

produces about 290,000 metric tonne of Cumene per year with 8000 hours of on stream

factor leading to about 36 metric tonne cumene produced per hour. It uses a zeolite

catalyst from EXXON MOBIL for the process. The raw materials needed for their

production is 190,904 metric tonne of benzene and 102,728 metric tonne of propylene

annually. This leads to around 12.841 metric tonne of benzene and 23.863 metric tonne

of propylene per hour. The cumene is mainly used for the production of aromatic

substances such as phenol and acetone and some small quantities are used for the

manufacturing pesticides.
2.4 Market Supply of Raw Product

Benzene and propylene as the raw product of cumene production has affected the

production rate globally and locally. In United States of America, the cumene used up

most of the benzene produced as shown in Figure 2.7. The phenol production uses up

the other cumene production while some of the other cumene are exported to other

country.

Figure 2.7: Usage of benzene to products

In Malaysia, there are many benzene and propylene supplier as the benzene and

propylene can be widely found through petroleum or synthesised. According to the

Petrochemical Industry in Malaysia report published by Federation of Malaysia

Manufacturers, Benzene and Propylene are widely produced in locally in West Malaysia.

Feedstock at competitive prices have made Malaysia a viable petrochemical hub in the

ASEAN region attracting more than USD$9 billion in investments from leading

petrochemical and chemical manufacturers.

Table 2.1: Production of Petrochemical Feedstocks

Petrochemical Products Capacity (mtpa) Company

Benzene 775 thousand Titan Petchem (M) Sdn Bhd
 MTBE (M) Sdn Bhd

Optimal Olefins (M) Sdn Bhd

Propylene 854 thousand Titan Petchem (M) Sdn Bhd

Aromatics Malaysia Sdn Bhd

As indicated from Table 2.1, Titan Petchem (M) Sdn Bhd manufactures both the

vital raw materials of cumene, which are benzene and propylene. Benzene and propylene

plants of the company are located in Pasir Gudang, Johor.

Subsequently, the availability and price of raw materials for feed streams play a vital

role in determining the plant location. For most part, proximity to chemical operations of

raw materials is an added advantage to ease transportation logistics cost.

2.5 Production Rate

In this part, the rate of production is determined through calculations based on

the global needs and the local trends. The global consumption of cumene is estimated at

16.9 million tonnes per year while in Asia the estimated cumene consumption is at 4.6

kilo metric tonnes per annually. The raw material supply available in Malaysia is 775

kilo metric tonne for benzene and 854 kilo metric tonne for propylene. The table 2.2

below shows the available resources for the raw material.

Amount of Cumene:

100,000 T 1000 kg kmol kmol

=831,946.76
yr T 120.20 kg yr

Amount of Benzene:

831,946.76 kmol 78.11 kg kg

0.651 42,304,168.05
yr kmol yr

Amount of Propylene:
 831,946.76 kmol 42.08 kg kg
0.352 12,322,928.45
yr kmol yr

Hence, economic potential for this route can be calculated by equation below,

EP = Revenue Raw Material Cost

12,322,928.45 kmol $ 990

yr 1000 kg
831,946.76 kmol $ 1477 120.20 kg 42,304,168.05 kmol $ 965 )
EP= ( yr

1000 kg

kmol
)( yr

1000 kg
)
= $147,700,000/yr - $40,823,522.17/yr - $12,199,699.17/yr

= $94,676,778.66/yr

= RM420,364,897.30/yr

Table 5.1: Tabulated prices of materials, products and by-product

Raw Materials Price/ $ per Cost per year (RM) References

metric tonne
Benzene 965 40,823,522.17 Apic, 2017
Propylene 990 12,199,699.17 Polymerupdate,

2017
Products
Cumene 1477 147,700,000 ICIS News, 2012
By-products
Propane 268.7 - IndexMundi,

2017
Propylene 869 - Platts, 2017
 RM 500,000,000
Payback period = RM 420,364,897.30/ yr = 1.19 years

2.7 Summary

For this section,

IHS Markit (2016) Chemical Economics Handbook Cumene Available at:

https://www.ihs.com/products/cumene-chemical-economics-handbook.html Accessed on

28th February 2017