19 April 2004 00:01 [Source: ACN]
TIGHT supply, rising feedstock costs and strong demand from the bisphenol A (BPA), polycarbonate (PC) and phenolic glue segments caused phenol prices in Southeast Asia to rise to an all-time high of US$1000/tonne cfr SEA last week.
Smaller parcels of 300-tonne were sold at an even higher price of US$1050/tonne cfr SEA.
A producer said prices were likely to rise further in the coming weeks, as supply was getting increasingly tight and demand was expected to continue to strengthen.
In China, however, the situation was somewhat differen Offers of US$900/tonne cfr China faced resistance from customers.
Chinese customers were adopting a wait-and-see approach in the hope that prices would come down. But traders and producers said that the price resistance was likely to abate by next month, as Chinese customer inventories dissipated and customers were forced to return to the market in search of fresh supplies.
Supply continued to be tight in Asia last week, with one producer in SEA saying it had no spot cargo left for May after meeting its long-term commitments.
So severe is the shortage that Mitsui Chemicals plans to postpone its scheduled one-week shutdown at its 250 000 tonne/year plant at Jurong Island, Singapore, to July from May. However, the company is sticking to its original schedule for its proposed month-long maintenance shutdown of the plant in October.
Mitsui’s two other phenol plants, located in Chiba and Osaka, in Japan, were last week on month-long turnarounds. The plants, with a combined capacity of 390 000 tonne/year, will be restarted at the end of April. The prospect of deep-sea cargoes from Europe also appeared remote last week, as Europe was extremely tight.
A further factor behind the tight supply was the global shortage of cumene.
Rising benzene and propylene costs have also prompted phenol producers to raise prices.
Benzene had risen to US$710-720/tonne fob Korea last week, US$60/tonne higher than the previous week. And propylene was also up by US$15-20/tonne, to US$750/tonne cfr SEA.
Also helping prices to rise was improving market sentiment in the BPA-PC sector. Helping strengthen sentiment was tight supply, exacerbated by a reduction in operating rates among Chinese players who were facing problems sourcing phenol.
BPA prices were up by US$10/tonne from the previous week, at US$1120-1200/tonne cfr NEA. Contract prices for BPA showed an even more significant rise.
One producer said it had settled with its customers from the PC sector at US$1200/tonne cfr Asia for Q2 2004, a US$200/tonne increase from its Q1 settlements.
But suppliers said they were finding it hard to hike prices for epoxy-grade material, with offers of US$1200/tonne cfr Asia facing buying ideas of US$1050-1100/tonne cfr Asia.
PC prices also firmed, on the back of rising BPA feedstock values. Optical-grade PC prices had risen by US$50/tonne from the previous week, to US$1800-1850/tonne cfr Taiwan, while extrusion-grade PC was up by US$60/tonne to US$1780-1850/tonne cfr Taiwan. And May cargoes for both grades were being offered at US$1900/tonne cfr Taiwan, with no buying ideas available at the time of going to press.
In SEA, optical and extrusion grade cargoes were both at US$1850/tonne cfr SEA
A factor which has helped PC prices to strengthen is the fact that the market is close to achieving a supply/demand balance.
Global PC capacity is placed by consultants at 2.5m tonne/year, with demand at 2.2m tonne/year. However, global demand growth was said by the source to be 8-9%, with growth in China at more than 10%.
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