Chapter 2 Market Needs of Cumene

2.1 Introduction

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

cumene and their respective raw materials needed for the production of cumene.

This chapter is discussed to ensure that the company can gain benefit from the

production and survive through to the end of the period.

In this chapter, there are 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 demand and the production are

analysed and evaluated while on the Asia market trend, the demand and the

production of the cumene along the Asian region are determined using big

manufacturing companies 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 in their region is analysed. Lastly, 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 and acetone, which

consume 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 the market for epoxy resins and polycarbonates

demand that is the end product of phenol and acetone, 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).

1
 The demands of cumene globally are dispersed to 3 main regions which

are in Europe, America and Asia. Among all the selected regions, Asia is the

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

world cumene demand. The second largest continent that has a high demand of

cumene is shared by North America and Western Europe, each demanding 22%

of the world cumene demand. Figure 2.1 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 fast developing countries

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

countries, Belgium leads the cumene consumer with 28.9% of the total cumene

supplied to the European region, which is valued at 3,785.63 kilotonnes in 2012.

The trends of cumene demand in Europe is also expected to increase at a rate of

4.1% from 2013 up until 2018 (Micromarket Monitor, 2017). In North America

region, United States of America has the highest cumene consumption taking up

about 98.8% of the cumene demand in the region. The estimated amount of

cumene demand for the North America region reaches up until 3364.37

kilotonnes.

2
 As mentioned in the previous section, most of the cumene produced in

this world are contributed to the production of phenol and acetone. 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 in Europe, North

America and North Asia. This is due to the advancement of technology that uses

phenol as bisphenol-A, phenolic resins, etc.

Figure 2.2: Phenol Supply and Demand in Europe

Figure 2.3: North America Phenol supply and Demand

3
 Figure 2.4: North Asia Phenol supply and demand

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

applications for as the end products. 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

4
 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 as it accounts for 35% of the cumene demand

globally, where cumene is used for the production of plastics, composites,

laminates, etc. Along the Asian 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. In essence, 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, therefore affecting the demands of

cumene. Other than that, the applications of the 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 high-end quality products.

There are various companies that take the opportunity to increase their

cumene production rate and some new companies have started to establish a

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

produce cumene, SABIC is one of the main company that produces cumene and

5
uses it. It is one of the largest cumene production plants in Saudi Arabia. Before

the advancement of technology, cumene is extracted from crude oil. However,

with the advancement of technology, 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.

In Malaysia, the uses of cumene vary whether it is used for the

production of rubber, epoxy resins and polycarbonate sheet. There are many

companies in Malaysia that utilise this product and produce them. Take the

polycarbonate sheet, there are many companies in Malaysia that manufacture

polycarbonates such as Everise Stellar (M) Sdn Bhd, Golden Millenium, YS

Polycarbonates, etc. The main usage of cumene is to produce phenol, hence some

of the phenol manufacturing company includes MITSUI Chemicals and their

plants in Selangor, Wilayah Persekutuan Kuala Lumpur and Melaka.

2.4 Market Supply of Raw Materials

Benzene and propylene as the raw materials of cumene production have

affected the production rate globally and locally. In the United States of America,

cumene has 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 another country.

6
 Figure 2.7: Usage of benzene to products

In Malaysia, there are many benzene and propylene suppliers as both raw

materials can be widely found in petroleum. According to the Petrochemical

Industry in Malaysia report published by Federation of Malaysia Manufacturers,

benzene and propylene are widely produced locally in West Malaysia. Feedstock

at competitive prices has 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 775,000 Titan Petchem (M) Sdn Bhd
Propylene 854,000 Titan Petchem (M) 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 the most part, proximity

to chemical operations of raw materials is an added advantage to ease

transportation logistics cost.

2.5 Production Rate

By 2000, cumene capacity will stand at 10,000,000 tonnes per year

(ICIS, 1999). On the other hand, the cumene production is 3,143,392 tonnes in

7
2011 and 3,138,857 in 2012 (John Dietrich, 2013). It is expected that the

cumene supply will be around 14,000,000 tonnes in 2020.

Global demand of cumene is at 8,607,235 tonnes in 2000 had

exponentially amounted to 12,394,375. The development of the demand is

anticipated at a compound annual growth rate (CAGR) of 4.2% to touch

17,988,934 tons by 2020 as shown in Table 2.2 and Figure 2.8. At a global level,

production and demand of cumene have been largely dominated by established

countries. The global share held by the Asia-Pacific region has increased the

large capacity additions in the form of aromatic plants in China, where the

substantial market share has already accounted for the relatively developed

Japanese market (Mike King, 2013).

Table 2.2: World Cumene Supply and Demand

2000 2011 2012 2020

Supply 10,000,00 3,143,392 3,138,857 14,000,000
(Tonnes ) 0
Demand 8,607,235 12,394,375 12,400,400 17,988,934
(Tonnes)
Balance - 9,250,983 9,261,543 3,988,934
(Tonnes) 1,392,765

World Cumene Supply and Demand

20,000,000

15,000,000

10,000,000 Supply
Production Capacity, Tonnes Demand
5,000,000 Balance
0

-5,000,000

Year

Figure 2.8: Global Cumene Demand

8
 Based on the market survey, there is no company that produces cumene

in Malaysia. Besides, cumene global demand is expected to rise to 17,988,934

tonnes in the year 2020, whereas the global production capacity of cumene is

predicted to be above 14 million tonnes per year. Based on Figure 2.8, the

demand for cumene is higher than the supply in 2020. The balance of cumene

needed is about 3,988,934 tonnes per year. On the other hand, the raw material

supply available in Malaysia is 775,000 tonnes for benzene and 854,000 tonnes

for propylene. Since the raw materials are available locally and there is a

demand of the cumene in Malaysia, this plant is expected to produce about 2.5%

of the balance by the year 2020 which is 100,000 tonnes per annum. It is

advisable to build a small plant to fulfill local demand. This amount of cumene

produced should be able to supply the needs of local demand to assist in

reducing the taxes and transformation fees made through importing from

another country.

To produce 100,000 tonne per year of cumene, amount of benzene and

propylene need to be calculated as shown below:

Amount of Cumene:

100,000 tonne 1 yr 1 day

=11.42 tonne/hr
yr 365 days 24 hr

100,000 tonne 1000 kg kmol kmol

=831,946.76
yr tonne 120.20 kg yr

Amount of Benzene:

831,946.76 kmol 78.11 kg 1 tonne 1 yr 1 day tonne

0.651 4.83
yr kmol 1000 kg 365 days 24 hr hr

Amount of Propylene:

831,946.76 kmol 42.08 kg 1 tonne 1 yr 1 day tonne

0.352 1.41
yr kmol 1000 kg 365 days 24 hr hr

Table 2.3: Tabulated prices of materials, products and by-product

Raw Materials Price/ $ per tonne Cost per hour ($) References
Benzene 965 7,169.95 Apic, 2017

9
 Propylene 990 3,979.80 Polymerupdate,
2017
Products
Cumene 1477 5,717.59 ICIS News, 2012
Byproducts
Propane 268.7 - IndexMundi, 2017
Propylene 869 - Platts, 2017
The conversion rate of USD to MYR is taken at $1 to RM4.45 as of 15th March

2017.

In order to find the payback period:

1.41 tonne $ 990 24 hr 365 days

hr 1tonne 1 day 1 yr
831,946.76 kmol $ 1477 120.20 kg 4.83 tonne $ 965 24 hr 365 days
EP= ( yr

1000 kg

kmol
)(hr

1 tonne 1 day

1 yr
)
)

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

= $94,676,778.66/yr

= RM 421,311,665/yr

Cost to buy raw materials per year = $40,823,522.17 /yr + $12,199,699.17/yr

= $53,023,221.34 /yr
= RM 235,953,335 /yr

RM 500,000,000
Payback period = RM 421311665 / yr = 1.09 years

2.7 Summary

For this section, the demand of the cumene has been proven to have a

high demand locally and globally. Based on the first part of this chapter, the

demand and trends are expected to grow throughout the year up until 2020.

From the second part of this chapter, the market trend in Asia is more

convincing as the global demands are mainly from the Asian region and still

expected to grow along with the advancement of technology. Besides, the raw

material available locally is more than enough for the production of cumene and

10
the plant can be established locally based on the available resources nearby.

Lastly, the production rate is suggested based on the demand of cumene and the

availability of raw products locally, which is 100,000 tonnes per year. Hence, the

payback period is calculated to be less than 2 years.

References

IHS Markit (2016) Chemical Economics Handbook Cumene. Retrieved from:

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

Mitsui Chemicals (2017) Southeast Asia. Retrieved from:

http://www.mitsuichem.com/corporate/oversea/se_asia.htm

King, M. (2013). Global cumene market expected to hit 18 million tons by 2020.
Retrieved from: http://www.mynewsdesk.com/uk/pressreleases/global-cumene-
market-expected-to-hit-18-million-tons-by-2020-831810

Dietrich, J. (2013, January 31). US 2012 cumene production increases 0.2%

year on year. ICIS News. Retrieved from:
https://www.icis.com/resources/news/2013/01/31/9636780/us-2012-cumene-
production-increases-0-2-year-on-year/

ICIS, (1999). Supply/demand. Available at:

https://www.icis.com/resources/news/1999/11/29/100160/cumene/

11