US February phenol contracts rise by 8.4% on feedstocks

01 March 2012 16:51  [Source: ICIS news]

US phenol contract prices move upHOUSTON (ICIS)--US February phenol contract prices moved higher by 8.4% on higher benzene prices, sources said on Thursday.

Prices increased by 6.79 cents/lb ($150/tonne, €112/tonne), moving to 84.89–89.34 cents/lb FRT EQ (freight equalised), as assessed by ICIS. January prices were assessed by ICIS at 78.10–82.55 cents/lb.

Producers and buyers said contracts were settled equal to the change in February benzene, which was 50 cents/gal.

Several buyers cautioned that feedstock costs are rising because of tensions regarding crude oil supply, rather than a boost in demand.

Downstream, however, consumers are not picking up demand at a similar rate, which could lead to difficulties as buyers struggle to keep up with feedstock costs and producers struggle to keep margins healthy.

Buyers in the phenolic resins market said that some demand is returning on signs that the US construction industry is improving, but not enough to justify paying anything above the benzene change.

Demand for phenol from the bisphenol A (BPA) market is stable at higher levels, sources said, and is set to improve in the spring.

A trader said it is seeing operating rates at downstream polycarbonate (PC) plants increasing, and epoxy resins producers said they expect sales to increase as warmer weather leads to more painting and construction activity.

Phenol producers pointed out that supply of phenol is balanced to tight because of lower operating rates.

With overseas demand stagnant, especially into Asia, most US producers said they have been slowing down and focusing on filling contract volumes.

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

($1 = €0.75)

By: John Dietrich

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