Europe August phenol contract up €108/tonne in line with benzene

03 August 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--The European August phenol contract price has increased by €108/tonne ($132/tonne) from the previous month, following the same increment in the August benzene contract, phenol producers and consumers said on Friday.

The settled on a pre-discounted basis at €1,625–1,665/tonne FD (free delivered) NWE (northwest Europe).

The phenol contract in Europe is largely linked to feedstock benzene price movements, although a quarterly fee is also an influencing factor for some producers and consumers in Europe.

The European benzene contract price for August was agreed at €1,061/tonne FOB (free on board) NWE, an increase of €108/tonne. The settlement was made at a US dollar concept of $1,299/tonne.

In relation to supply and demand in Europe, one consumer said: “Phenol is not so strong, there is a summer dip.”

Global financial instability is sapping consumer confidence, and market participants have been cautiously watching the upward price movements in the benzene market.

“Everybody is worried about the high benzene price in the US and Europe,” a producer said. “Phenol demand is lacklustre. It’s okay, it’s not great.”

European phenol and derivative operating rates have been reduced to approximately 60-80%, because of lower demand. "People have cut back on units," a producer said. "There is not as much volume flowing through the units."

“Derivatives [caprolactam, bisphenol A (BPA), polycarbonate (PC)] aren’t performing well, so operating rates for phenol are low,” another seller said. “High benzene prices have killed demand.”

The major uses of phenol involve its conversion to plastics or related materials. Condensation with acetone gives bisphenol-A (BPA), a key building block for polycarbonates. Condensation with formaldehyde gives phenolic resins, the most famous of which is Bakelite. Hydrogenation of phenol gives cyclohexanone, an intermediate en route to nylon.

($1 = €0.82)

By: Helena Strathearn
+44 208 652 3214

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