Europe November phenol contract down €41/tonne on benzene fall

04 November 2011 15:36  [Source: ICIS news]

LONDON (ICIS)--The November European phenol contract price has decreased by €41/tonne following the same fall in the months benzene contract price, market participants said on Friday.

November phenol settled on a pre-discounted basis at €1,204–1,244/tonne ($1,672–1,728/tonne) FD (free delivered) NWE (northwest Europe).

In relation to the phenol settlement, a producer said: “Phenol is down with benzene as usual. Demand has definitely slowed by more than we expected.”

A second producer, which also confirmed that its November phenol contract price has dropped by €41/tonne, described demand as simply “not there”.

It said: “I expect to see further weakness, not because inventories are high, but [because] demand is not there.” 

Demand across the phenol derivative chain has decreased as downstream buyers attempt to run their facilities with the lowest inventories possible because of concerns about eurozone and global economic instability.

These factors are making it increasingly difficult for buyers and sellers to plan.

One buyer said it was tough to forecast beyond a week.

“We are in the dark, because our customers are in the dark,” the buyer said.

Phenol contracts in Europe are 100% linked to feedstock benzene, with the supply-and-demand dynamics of the market having no influence over the outcome of the contract price.

However, market fundamentals do have an impact on the phenol spot market, although it only accounts for a small percentage of the phenol market.

Spot phenol prices have dropped to €850–950/tonne FD NWE because of the fall in demand for phenol derivatives, including, bisphenol A (BPA), caprolactam (capro) and adipic acid.

Phenolic resin demand remains at a steady level and one resin producer said that October had proved its strongest month in terms of demand since 2008.

“It’s not clear why October was so good. Maybe its down to the market restructuring,” the producer said.

($1 = €0.72)

For more on phenol visit ICIS chemical intelligence

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By: Julia Meehan
+44 20 8652 3214

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