Europe December phenol contract up €11/tonne on benzene rise

02 December 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--The December European phenol contract price has increased by €11/tonne following the same increase in the cost of feedstock benzene, producers and consumers said on Friday.

The phenol contract price settled on a pre-discounted basis at €1,215-1,255/tonne ($1,642-1,659) FD (free delivered) NWE (northwest Europe).

Market followers were surprised to see an increase in benzene and subsequently phenol considering the benzene market was so weak in November.

However, the benzene settlement was agreed on a US dollar concept of $895/tonne FOB (free on board) NWE, which actually represents a drop of $40/tonne from November.

Referring to the phenol contract, a major producer said: “Benzene moving up was unexpected, but there are no major changes in the phenol market. Demand is as expected and everybody is running with low inventories.”

A major buyer said that although it was taking “very little” material because of seasonally low demand, its phenol contract price increased with benzene.

Another buyer said its demand was below the original forecast for December, but since its phenol contract is based on a benzene formula the supply and demand dynamic of the market had no influence on the outcome of its contract price.

In the downstream bisphenol A (BPA) market, two BPA producers have confirmed that operating rates are close to, if not at, 50%.

BPA operating rates have been reduced because of very poor demand for polycarbonates in Europe and for export to Asia, as well as a drop in demand for epoxy resins.

Phenol producers did not dispute that some of their BPA customers were running at 50%, but stressed reduced rates in December were nothing new.

“Running at reduced rates is normal for the time of year, although it’s normally 60-70%,” said a phenol producer. “Running at 50% is not big news,” he added.

($1 = €0.74)

For more on phenol visit ICIS chemical intelligence
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By: Julia Meehan
+44 20 8652 3214

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