27 July 2012 23:06 [Source: ICIS news]
HOUSTON (ICIS)--US July phenol contracts were assessed 3% higher on Friday, tracking feedstock July benzene contract prices and tighter supply.
Sources said July contract prices increased by 2.58 cents/lb ($57/tonne, €46/tonne), the ICIS assessed range to 86.25-90.70 cents/lb FRT EQ (freight equalised).
June contract prices were assessed by ICIS at 83.67-88.12 cents/lb FRT EQ.
Sources attributed the increase to the 19 cent/gal increase in the July benzene contract.
Phenol margins over benzene continue to face downward pressure, sources said, because of continued soft demand downstream.
Phenolic resins buyers said demand is steady at lower levels, while a Latin American source said cheaper Asian material is making its way into South America.
On the epoxy resins side, competition in the US from imported epoxy resins continues to be strong, although domestic producers say their sales levels are still healthy.
Tight phenol supply continues to mitigate some of the downward pressure on margins, with operating rates around 70% for most plants, sources said.
Additionally, spot deals for phenol into Asia are seeing low margins, in the range of 1-3 cents/lb, sources said.
The low margins on spot phenol deals are expected to discourage producers from increasing operating rates, despite trading activity taking place.
Major US phenol producers include Dow Chemical, Georgia Gulf, Haverhill Chemical, Honeywell, INEOS Phenol, SABIC Innovative Plastics and Shell Chemical.
($1 = €0.81)
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