Europe July phenol contract price follows benzene down

06 July 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--The European July phenol contract price has decreased by €68/tonne following the drop in the July benzene contract, producers and consumers said on Friday

The price settled on a pre-discounted basis at €1,517-1,557/tonne ($1,873-1,922/tonne) FD (free delivered) NWE (northwest Europe).

“Contract prices have moved down with benzene, it’s given us some relief, but I’m a little worried because benzene prices have started to go up again,” a major buyer said.

July pricing for European benzene moved up this week in line with oil and energy, although August remains heavily backwardated – an indication of the economic and political malaise being felt in the eurozone and its effects on petrochemical demand. July spot values were at $1,250–1,265/tonne CIF ARA, up by $25–60/tonne from last week’s close.

 

The July contract settled at a US dollar concept of $1,183/tonne FOB NWE.

The buyer also spoke about its quarterly fee, also known among the phenol market as the 'adder' over benzene.

In the past, this has typically been agreed on an annual basis and continues to be done this way between some producers and consumers, but quarterly fee contracts are also in place.

Regarding the third quarter fee, the buyer said it was disappointed since it was hoping to recover what it lost in the second quarter.

Another major buyer said it was still in discussions about its fee because it viewed the current dynamics of the market quite differently from the start of the second quarter, when demand was better and phenol availability was tight.

On the selling side, reductions on the third quarter fee were confirmed at a maximum of €5/tonne. A seller said customers did want more, but arguments were not strong enough to warrant a bigger drop.

 

"Rollovers were also agreed at some larger accounts," confirmed a European producer.

Demand for phenol clearly started to ease mid-second quarter as consumers downstream began to consider reducing production rates.

Only in recent weeks have producers and consumers confirmed that they have reduced operating rates. Estimates are between 10-20%.

Nonethless, phenol producers still sound relatively calm about the current level of demand in Europe.

Indeed, a buyer for speciality applications said its demand for phenol was higher than expected for July.

“Our demand is higher than normal because some of our customers are filling up their stocks because of [summer] shutdowns,” the buyer said.

The phenol market also has a number of outages underway in Europe.

Poland’s PKN Orlen started its planned phenol and acetone maintenance outage on 22 June and is due to come back on stream 1 August.

The company has the capacity to produce around 52,000 tonnes/year of phenol and 30,000 tonnes/year of acetone at its facility in Plock, Poland.

Domo Caproleuna has entered into a planned shutdown at its phenol and acetone facility in Leuna, Germany, for approximately two weeks. The plant has the capacity to produce 150,000 tonnes/year of phenol and 90,000 tonnes/year of acetone.

France’s Novapex is also due to close its plant in Roussillon in August for a schedule summer outage.

On Friday, ongoing tightness for July benzene pushed values up, with first half July deliveries at $1,255-1,340/tonne CIF (cost, insurance and freight)  ARA (Amsterdam-Rotterdam-Antwerp). The July benzene contract price settled at a US dollar concept of $1,183/tonne FOB (free on board) NWE (northwest Europe).

($1 = €0.81)


By: Julia Meehan
+44 20 8652 3214



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