31 August 2012 17:41 [Source: ICIS news]
HOUSTON (ICIS)--The US August phenol contract was assessed 4.6% higher on Friday, tracking the surge in feedstock August benzene.
With the August benzene contract at a record high, US August phenol contracts increased by 4.07 cents/lb ($90/tonne, €72/tonne), pushing prices to 90.32-94.77 cents/lb FRT EQ (freight equalised).
“We are simply baffled by the phenol market,” a buyer said. “There’s no reason for benzene to have been where it was.”
July prices were assessed by ICIS at 86.25-90.70 cents/lb FRT EQ.
Buyers said domestic demand for phenol has been steady to slightly softer year on year.
However, export demand has dropped significantly, which has allowed US buyers to push their premiums over benzene lower, as producers cannot move their material elsewhere.
“The phenol market has tanked,” another buyer said. “We’re expecting to see our premiums fall again in the fourth quarter.”
Sources said most US phenol contracts are being done at benzene plus 8-14 cents/lb, depending on how often the premiums are negotiated.
“The biggest challenge in the US is that people aren’t getting the returns they’re used to,” a producer said.
In addition to being based on more expensive benzene, US phenol has been unattractive to Asian buyers because of weak demand overseas, due mostly to economic concerns and increased capacity in that region.
“You can’t move US product into Asia,” a trader said. “It simply can’t be done.”
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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