UOP, a Honeywell company, announced today that Shanghai-based CEPSA Chemical will use UOP's Phenol process technology to produce high quality phenol and by-product acetone, key building blocks for polycarbonate plastics used in domestic construction and automobile production. The new facility is going to be built at the Shanghai Chemical Industry Park and will have a capacity of 250,000 mt/a of phenol and 150,000 mt/a of acetone, and will make CEPSA the second-largest producer of phenol in the world.

China is the world's largest consumer of polycarbonate plastics, representing nearly 30 percent of global consumption. Demand is expected to grow by 13 percent annually during the next 10 years. CEPSA Chemical is majority owned by CEPSA, an integrated energy company based in Spain.

"We are devoted to the Chinese market, and with this plant, CEPSA will have a network of facilities away from its home country in order to meet demand where the growth is taking place," said Fernando Iturrieta, Chief Executive Officer of CEPSA Química. "Despite recent, lower than expected growth figures, China will continue to be a growing market and CEPSA wants to be there. We are very proud of this project in Shanghai, as it is the first investment of CEPSA in Northern Asia."

In addition to technology licensing, UOP will provide process design and start-up services for the Shanghai complex, which is expected to begin production in November 2014. The new phenol plant will be integrated with CEPSA Chemical's cumene plant, which is being built at the same site.

"UOP and CEPSA have been technological partners across the entire value chain of the refining and petrochemicals industry for nearly 40 years," said Pete Piotrowski, senior vice president and general manager of UOP's Process Technology and Equipment business unit. "CEPSA, a top global phenol producer, currently operates three UOP Phenol units in Spain and our technology has a proven track record of performance and safety in those operations."

Kai Pflug, Management Consulting - Chemicals, comments:

Phenol is another Chinese chemical market in which past supply gaps have led to vast capacity announcements, putting the future profitability at risk. While 2013 consumption was about 1.55 million tons, a similar capacity will come into operation in the next 2-3 years, CEPSA´s being one part of it. The market grows quickly due to the shift to bisphenol A as major consumer instead of phenolic resins, still, the capacity may grow so fast that China may become a phenol exporter soon.