US formula-based August phenol contracts rise 7.4% on benzene

26 August 2011 18:07  [Source: ICIS news]

HOUSTON (ICIS)--US formula-based August phenol contracts were mostly settled at an increase of 7.4%, tracking higher August benzene, sources said on Friday.

August phenol contracts tied to benzene increased by 5.97 cents/lb ($132/tonne, €92/tonne), as August benzene increased by 44 cents/gal, as assessed by ICIS.

Producers and buyers said they expect freely negotiated phenol contracts to settle 5.97 cents/lb higher as well. Sources said that negotiations are still ongoing in most cases, however.

Freely negotiated phenol contracts have a premium of 0.5–1.0 cents/lb over formula-based contracts for much of 2011 because of tight domestic supply and strong overseas demand.

With Asian spot phenol prices down $340/tonne from their 2011 peak and US phenol supply looser than in the first half of the year, the premium has vanished.

Producers said US supply is still snug, and demand is healthier than it was a year ago, so it is unlikely that freely negotiated contracts will start to settle at a discount to formula-based contracts.

Buyers have said demand is softening, particularly from the resins and bisphenol A (BPA) sectors, but that they are still ordering full volumes of phenol.

US August phenol contract prices were assessed by ICIS at 83.94-88.39 cents/lb FRT EQ (freight equalised).

Major US phenol producers are Dow Phenol, Georgia Gulf, Honeywell, INEOS Phenol, SABIC Innovative Plastics and Shell Chemical.

($1 = €0.70)

For more on phenol visit ICIS chemical intelligence


By: John Dietrich
713-525-2600



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