FocusAsia phenol to see moderate gains in March

28 February 2008 05:02  [Source: ICIS news]

By Peh Soo Hwee

SINGAPORE (ICIS news)--Phenol producers are seeking price hikes in Asia on the back of a spate of turnarounds in the region starting March, but any gains are expected to be moderate, traders and sellers said on Thursday.

Mitsui Chemicals, Asia’s largest phenol and acetone producer, announced early this week that it planned to raise the March phenol contract price by $100/tonne (€66/tonne) to $1,650/tonne CFR (cost and freight) China, inclusive of 6% antidumping duties, compared with February fixtures.

Other sellers were also eyeing price increases in anticipation of a tightening in supply and prevailing high benzene feedstocks costs but several traders predicted limited price upside in the key China spot market.

"The market should improve next month as end-users have resumed plant operations after the holidays but substantial hikes would be unlikely," one Chinese trader told ICIS news on the sidelines of a phenol-acetone conference here.

"Any price increase would also hinge on producers reducing supplies to China because of the turnarounds," he said in Mandarin.

Traders and producers said it would take some time for inventories in the Chinese domestic market to be digested following sluggish demand in the first two months of 2008.

Phenol sales had slowed down in February due to the Chinese New Year holidays. The January start-up of Kingboard Chemical’s 200,000 tonne/year phenol-acetone plant in Guangzhou, southern China, had also lengthened domestic supply and exerted downward pressure on local prices, they said.

Taiwan Prosperity Chemical would kick off the turnaround season in Asia next month when the producer shuts its plant for three weeks of maintenance and debottlenecking work starting 5-6 March, a company official said.

The Kaohsiung plant's phenol output was expected to be increased by 70,000 tonnes/year to 270,000 tonnes/year while acetone production would be raised by 42,000 tonnes/year to 162,000 tonnes/year after the shutdown.

"If buyers want to get regional cargoes, they would at least have to pay in the range of $1,560-1,620/tonne. Producers are unlikely to want to sell phenol to China below $1,560/tonne CFR," one northeast Asian seller said.

Phenol spot prices were assessed at $1,500-1,560/tonne CFR China last week, according to global chemical market intelligence service ICIS pricing.

Offers of European cargoes for March loading were heard at $1,580/tonne CFR China while bids were pegged $20-30/tonne lower at $1,550-1,560/tonne CFR China. No deals were reported this week due to ongoing negotiations.

Some buyers, however, were confident of sufficient supplies despite turnarounds in the region. The availability of deep-sea cargoes from Europe and the US would help to offset an expected reduction in Asian supplies, they added.

"We have been warned by everyone but so far it is not a problem [to get cargoes]," a phenolic resins producer said.

($1=€0.66)

For more on phenol and acetone, visit ICIS Chemical Intelligence

By: Peh Soo Hwee
+65 6780 4359

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly