FocusAsia phenol prices seen rising on tight supply, Japan buying

01 April 2011 07:00  [Source: ICIS news]

By Felicia Loo and Liu Xin

Phenol goes into making of Blue-Ray discsSINGAPORE (ICIS)--Asian phenol prices are likely to trend higher in the coming weeks, bolstered by rare spot purchases by quake-ravaged Japan and regional plant maintenance, as well as firm downstream demand, market players said on Friday.

Stubbornly high feedstock prices, both propylene and benzene alike, also led to rising prices, they added.

In the week ended 25 March, phenol prices were assessed as $1,920-1,950/tonne (€1,344-1,365/tonne) cost and freight (CFR) China Main Port versus $1,810-1,840/tonne CFR CMP a month ago, according to ICIS data.

“Phenol supply is very tight. There is hardly any deep-sea supply from the United States and regional producers are not offering much cargo,” said one trader.

Compounding the situation, the trade flow has reversed with Japan switching to a spot phenol buyer from a net exporter.

No spot shipments were seen from Japan after the devastating earthquake last month, traders said.

Japan is facing a deep crisis. They need to buy phenol to support its BPA captive use,” said a trader, referring to domestic bisphenol-A units that require the phenol feedstock.

Japan has made an unusual spot purchase of 10,000 tonnes of phenol from China, Taiwan and South Korea for delivery in April, amid production turmoil in the aftermath of the 11 March disaster.

Some of the spot deals were linked to ICIS pricing formula, while other deals fetched prices at $1,790-2,030/tonne (€1,271-1,441/tonne) FOB (free on board) China, traders said.

Japan is expected to continue buying phenol on the spot market from April to June, a move that would fuel prices further, they added.

In Japan, it was not known when major phenol producer, Mitsubishi Chemical, would restart its phenol/acetone plant in Kashima which was shut down following the tumultuous events.

The plant has a capacity of 250,000 tonnes/year of phenol and 150,000 tonnes/year of acetone.

Mitsui Chemicals restarted its phenol/acetone plant in Chiba on 17 March. The plant is a joint venture (JV) between Mitsui Chemicals and Idemitsu Kosan and has the capacity to produce 230,000 tonnes/year of phenol and 138,000 tonnes/year of acetone.  

Mitsui Chemicals is running its other phenol/acetone plant in Chiba at full capacity. The unit can produce 190,000 tonnes/year of phenol and 114,000 tonnes/year of acetone.

Meanwhile, spot regional supply is quite drained ahead of a major turnaround in South Korea as well as ongoing maintenance.

Kumho P&B Chemicals will take its phenol/acetone units off line for 45 days starting from mid-May, and during which it would ramp up the capacity at one of the units.

The capacity of the No 2 unit will be expanded to 135,000 tonnes/year of phenol and 95,000 tonnes of acetone. At present, the unit can produce 100,000 tonnes/year of phenol and 60,000 tonnes/year of acetone, while its No 3 unit has a nameplate capacity of 250,000 tonnes/year of phenol and 155,000 tonnes/year of acetone.

Taiwan's Formosa Chemicals & Fibre Corporation (FCFC) plans to resume operations at its phenol/acetone plant in Mailiao on 15 April after a regular turnaround that started on 1 March.

FCFC has two phenol/acetone lines, each with a capacity of 200,000 tonnes/year of phenol and 123,000 tonnes/year of acetone.

Besides bullish supply-demand fundamentals, lofty propylene prices at a two-year high also supported the high price environment, traders said.

“There are many factors pointing to a higher price direction,” said one trader.

Phenol’s main derivatives is BPA used to make polycarbonate (PC) and epoxy resins, phenolic resins, caprolactam, alkylphenols, aniline and adipic acid. The largest market for phenol is BPA followed by phenolic resins.

The main use of acetone is in the manufacture of acetone cyanohydrin, which is a feedstock for methyl methacrylate (MMA). The other major and fast growing derivative of acetone is BPA. Both MMA and BPA are feedstocks for the production of resins and plastics.

Additional reporting by Serena Seng

($1 = €0.70)

For more on phenol/acetone, visit ICIS chemical intelligence
Please visit the complete ICIS plants and projects database
Read John Richardson and Malini Hariharan’s blog –
Asian Chemical Connections

By: Felicia Loo

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