25 May 2012 17:48 [Source: ICIS news]
HOUSTON (ICIS)--US May phenol contract prices are expected to rise by 1.4%, tracking the increase in feedstock May benzene contracts, sources said on Friday.
May US phenol contracts are expected to increase by 1.22 cents/lb ($27/tonne, €22/tonne), based on a 9 cent/gal increase in May benzene contracts.
“We were uncomfortable with the benzene change, but we agreed to it,” a buyer said.
This puts US May phenol contract prices at 85.03-89.48 cents/lb FRT EQ (freight equalized), as assessed by ICIS.
Sources said domestic demand has been steady to slightly improved year on year, but it is starting to fall below that pace.
The biggest concern for producers, however, remains persistently high benzene prices and weak export demand.
“There is no arbitrage window in Asia,” a producer said. “We can’t move it over there, so it doesn’t make sense to make more pounds.”
The weaker export demand is leading several buyers to argue for lower premiums over benzene.
At the start of the year, phenol was priced at a premium of 14-18 cents/lb over benzene. Now, buyers said, they have been able to lower their premiums in some cases by 0.50-1.00 cents/lb.
Major US phenol producers include Dow Chemical, Georgia Gulf, Haverhill Chemical, Honeywell, INEOS Phenol, SABIC Innovative Plastics and Shell Chemical.
($1 = €0.80)
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