April Euro phenol contracts likely to fall

03 April 2006 16:05  [Source: ICIS news]

LONDON (ICIS news)--Key European April phenol contract accounts were likely to fall slightly on the back of a drop in the benzene contract price this month, market sources said on Monday.

 

The benzene contract price was agreed on Friday (31 March) at Euro639/tonne free delivered (FD) Northwest Europe (NWE), down Euro13/tonne from March. If passed on, April phenol contract prices would settle in a range of Euro1,063-1,103/tonne free delivered (FD) Northwest Europe (NWE).

 

Phenol suppliers had hoped for a slightly larger feedstock decrease to reduce pressure on costs but most said comparative stability was a big improvement. Consumers agreed that the rapid swings in benzene prices between October and February had made business difficult.

 

In March, a decrease of Euro23/tonne on the benzene contract was welcomed by the phenol market and this trend has continued into April.

 

Market sources said European operating rates were high. One supplier speculated that production was at 95% capacity across the continent. Producers said demand was good and that the market was balanced. They expected this to continue in the second quarter.

 

Buyers said phenol output may have been nudged up to accommodate maintenance work. Borealis lost almost three weeks of production at its 140,000 tonne/year Porvoo unit in Finland in late February/early March because of technical issues. Ertisa has a two-week outage planned on both its lines in Huelva, Spain, in May. Total capacity at the site is 350,000 tonne/year.

 

While typical contract volumes were being taken, consumers added that key derivative sectors remained weak. This has led to little or no demand for additional spot material.

 

The bis-phenol A (BPA) derivatives market remained oversupplied amid the threat of Asian imports and, further downstream, polycarbonate (PC) buyers were pushing for Q2 price decreases due to an oversupply of product.

 

Phenol buyers said the limited opportunity to export to Asia could lead to an oversupply, if demand does not pick up soon.


By: Edward Cox
+44 20 8652 3214



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