05 July 2011 05:35 [Source: ICIS news]
By Liu Xin
SHANGHAI (ICIS)--Phenol spot prices in Asia fell to a one -year low of $1,550-1,600/tonne (€1,070-1,104/tonne), plunging 24% from late May, with further declines expected in the weeks ahead on the back of sluggish demand in the key ?xml:namespace>
Spot phenol slumped $500/tonne from late May levels to the latest price assessment on 1 July, according to ICIS data.
“Buying appetite from
The monetary tightening measures imposed by the Chinese government to curb inflation have taken a toll on demand from the downstream phenolic resins segment. End-users in the derivative phenolic resins sector have been forced to either shut their plants or cut their operating rates because of tight cash flow.
“We expect phenol to trend lower in July as downstream demand has been capped by tight cash flow and the appreciation of the Chinese yuan,” said a regional trader.
Export orders weakened becaused of a stronger Chinese currency, while end-users had to cut production to avoid an inventory build-up, industry sources said.
“Demand [in the second quarter] from the phenolic resins sector has declined 10-20% [year on year],” a China-based trader said.
Meanwhile, a recent slump in the derivative bisphenol A (BPA) segment added to the bearishness in the phenol market, industry sources said.
Spot phenol trade ground to a halt, with buyers keeping to the sidelines and saying prices have yet to bottom out. Majority of regional phenol facilities continue to run at full tilt as producers still enjoy healthy margins despite the recent plunge in prices, the buyers added.
Sellers, meanwhile, are pinning their hopes on a demand recovery, as inventory lingered at relatively low levels in
Meanwhile, phenol inventories in
Despite the recent sharp falls in prices, phenol values are still considered high, with end-users in the downstream phenolic resins sector having difficulty passing on the high production costs down the chain, market sources said.
($1 = €0.69)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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