China phenol-acetone chain sees big drops in Oct

31 October 2008 10:23  [Source: ICIS news]

SHANGHAI (ICIS news)--China’s phenol-acetone sector suffered a gloomy market in October as prices fell due to the global economic crisis, producers and traders said on Friday.

Phenol prices have plummeted yuan (CNY) 4,800-5,200/tonne ($702-760/tonne) to CNY7,500/tonne EXWH (ex-warehouse) since early October.

Acetone prices have dropped by CNY2,350-3,350/tonne to CNY5,700-5,800/tonne EXWH during the same period in east China, according to market sources.

Major producers Gaoqiao PC, located in Shanghai, and Yanshan PC, located in the Yanshan area of north China, have cut their ex-works (EXW) prices of phenol and acetone several times in October.

“It’s CNY7,000/tonne EXW for phenol and CNY6,000/tonne EXW for acetone now, which were just list prices,” an official from Yanshan PC said.

Many other major producers followed suit, and cut their offers in succession.

“These low prices did not help to boost buying interest and instead aggravated panic in the current market situation,” one downstream buyer noted.

“Our offers were hinged on market trend, however, few deals were done due to the worsening downstream bisphenol A [BPA] sector,” a phenol trader said in Mandarin.

BPA has fallen sharply to CNY8,200-8,400/tonne from CNY14,500-14,800/tonne EXWH at the beginning of October , a decrease of 43% at the high end of the range.

“It was rare in BPA’s market that we saw such sharp drops in just one month,” one major BPA trader said.

“The traders have no confidence at the outlook and many producers shut down in succession to relieve inventory pressure,” a key producer said.

Some small-to-medium-sized traders who previously kept high inventories reported that they were now selling down to improve cashflow, hastening the speed of the downslide.

“Our downstream sector's demand shrank quickly, leading to no demand for feedstocks BPA and ECH (epichlorohydrin),” said a producer from the epoxy resin industry.

($1 = CNY6.84)

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By: Amanda Zhang
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