Phenol may shoot up after Ineos blast

16 September 2002 00:00  [Source: ACN]

Asian phenol buyers were last week bracing themselves for a significant price rise following an explosion at Ineos Phenol's 400 000 tonne/year plant in Mobile, Alabama, US, on 9 September.

Ineos, which moves approximately 12 000 tonne/month to Asia from the Mobile plant, has declared force majeure. The company has not said when it will be able to restart the plant but some market players estimated it could be down for as long as a year.

Asian buyers directly affected by the Ineos accident include Mitsubishi Chemical in Japan and Bayer in Thailand. Ineos supplies to Bayer and 30 000 tonne/year to Mitsubishi from the Mobile plant. Ineos also exports around 3000 tonne/month to China and South Korea.

Asian buyers and sellers stepped back from the market last week, preferring to fully assess the market situation before disclosing price ideas.

Asian markets were tight even before the accident, as many turnarounds have been scheduled during September to October.

Mitsui Chemicals, which is due to turnaround its phenol plants in Singapore and Chiba, Japan, is unlikely to defer the shutdowns as preparatory work has started. Kumho Petrochemical has restarted its plant after a maintenance shutdown but was said to have limited export availability in October.

One major Asian producer warned that spot prices could easily breach the US$800-900/tonne level last seen in 1995.

'Spot markets are likely to see a new price level. It is a difficult time for both buyers and sellers as no one knows how rapidly prices will increase,' said the producer.

In China, domestic prices rose by Rmb700-800/tonne last week to Rmb7000/tonne.

Prior to the accident, deals in Northeast Asia were settled at around US$560/tonne cfr China. In Southeast Asia, small cargoes, of 800-1000 tonne each, were sold at US$670/tonne cfr SEA while larger cargoes fetched US$685-700/tonne cfr SEA.

Market players were gearing themselves for a period of uncertainty. While Ineos is reported to be looking at maximising production at its other plants in Europe, some players doubted if the additional volumes would be substantial.

Most of the other phenol producers in Europe and the US are already running their plants at close to full capacity, pointed out a market source.

ACN's sister agency CNI also reported that Shell Chemicals had shut down its facility at Deer Park, Texas, US, on 7 September for repair of an air compressor and other normal maintenance. The plant is due to start early this week.

Asian traders were reportedly scouting for deep-sea material but no deals had been settled as ACN went to press.

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