Europe Sept phenol contract down €35/tonne in line with benzene

07 September 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--The European phenol contract for September has decreased by €35/tonne ($44/tonne), in line with the drop in the September benzene contract price, customers and producers said on Friday.

The contract settled on a pre-discounted basis at €1,590-–1,630/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 a factor for some producers and consumers in Europe.

The European benzene contract for September was agreed at €1,026/tonne FOB (free on board) NWE, down €35/tonne from the previous month. The settlement was made at a US dollar concept of $1,287/tonne and converted to the euro price at the agreed exchange rate of €1:$1.254.

Market players said the decrease in the phenol contract price would offer some relief to downstream customers, who have been struggling with high feedstock costs and low demand.

“We were speculating that there would be more demand in September but this has not yet happened,” one producer said. “I do not expect there to be strong demand in September or October, or even the fourth quarter,” he added.

Downstream markets along the bisphenol A chain have been hard hit, according to sources, as end-use markets such as the automobile and construction industry have been particularly prone to downturns in the struggling global economy.

The major problem that customers report is that of absorbing upstream price hikes and lower-priced imports. “Margins are poor,” said one customer. “We see more low-priced phenol products moving from Asia into Europe.”

European phenol operating rates have been curtailed over the summer to fit demand. Export volumes out of Europe have also been low, as a result of faltering demand in other global phenol derivative markets as a result of the global economic slowdown.

“The general problem is that as long as phenol demand is not picking up in Asia, then Europe will not be able to export and operating rates will remain low,” said one manufacturer.

($1 = €0.79)

By: Jane Gibson
+44 20 8652 3214

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