US phenol spot market struggling because of high benzene costs

19 July 2012 17:12  [Source: ICIS news]

HOUSTON (ICIS)--The US spot phenol market “is getting killed” by high benzene prices, sources said on Thursday.

“August benzene is crazy and is killing phenol,” a trader said. “You can’t make phenol deals if you’re using August benzene.”

Benzene is the key feedstock for phenol, and spot prices recently hit record highs at $5.50/gal.

However, the July contract price for benzene was settled at $4.30/gal, while the August contract price has not been done.

August spot benzene prices are being heard above $4.70/gal, which could signify another increase to the contract price.

Sources said that US producers have been forced to offer spot phenol in July at parity or a slight premium to benzene prices.

“US producers were having to sell phenol flat to benzene in July, demand was so bad,” another trader said. “And domestic demand isn't very good either."

US spot phenol prices were assessed by ICIS at 58-62 cents/lb ($1,279-1,367/tonne, €1,049-1,121/tonne) FOB (free on board).

In addition to high feedstock costs hurting phenol sellers, sources said demand has been poor, especially in Asia.

This is partly because of weak domestic demand overseas and partly because supply has increased since Kingboard started its phenol plant in China in the second quarter.

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

($1 = €0.82)

By: John Dietrich

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