US January phenol contracts set to increase by 13% on benzene

05 January 2012 18:30  [Source: ICIS news]

The biggest concern for the US phenol-acetone market in 2012 is the possible shutdown of Sunoco’s cumene unit in Philadelphia, PennsylvaniaHOUSTON (ICIS)--The US January phenol contract price is set to increase by 13% on higher feedstock benzene costs, sources said on Thursday.

The January contract is expected to increase by 9.50 cents/lb ($209/tonne, €161/tonne) because of the 70 cent/gal increase in January benzene.

Along with the January benzene contract settling higher by 23%, spot benzene values have also increased, leading to upwards pressure on phenol prices.

This will push the US phenol contract price to 78.10–82.55 cents/lb FRT EQ (freight equalised), up from 68.80–73.05 cents/lb FRT EQ in December, as assessed by ICIS.

Sources said that the increase had already gone through in most of the formula-based contract market.

In the freely negotiated contract market, a producer said it expects sellers to push for the full increase, but that phenol supply is still loose.

That could prevent all of the increase from being passed along, pushing the increase down to 9.00–9.25 cents/lb.

However, supply is expected to tighten as phenol operating rates are down, a producer said, mostly because of softer demand and lower margins.

Buyers in the freely negotiated market are expected to argue that the softer demand for phenol is balancing out lower supply, which should prevent the full amount of the benzene increase from being passed on.

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

($1 = €0.77)

For more on phenol visit ICIS chemical intelligence

By: John Dietrich

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