28 September 2012 21:33 [Source: ICIS news]
HOUSTON (ICIS)--US September phenol contracts were assessed 5.9% lower on Friday, tracking weaker contract benzene.
US September phenol contracts were assessed by ICIS at a fall of 5.43 cents/lb ($120/tonne, €92/tonne) at 84.89-89.34 cents/lb FRT EQ (freight equalised).
US August phenol contracts were assessed by ICIS at 90.32-94.77 cents/lb FRT EQ.
Sources said the fall in phenol matches the 40 cent/gal fall in feedstock September benzene for formula-based and freely negotiated contracts.
“We are seeing phenol contracts facing pricing pressure heading into the fourth quarter, not so much in September,” a producer said.
Buyers had said they would push for freely negotiated contracts to drop by 5.5 cents/lb to reflect softness in the market.
“Demand is still very soft and they know it,” a buyer said. “They’re simply trying to protect their margins.”
Sources said that margins on phenol over feedstock benzene have mostly weakened throughout the year, owing to weak overseas demand and soft domestic demand.
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As a result, operating rates at phenol plants are low, which buyers argued should continually put downward pressure on pricing.
Exacerbating the issue, sources say, is surging benzene costs, which are higher than supply-demand balances would suggest.
“I hope benzene traders get burned on the speculation,” a phenol buyer said. “They’re only making it more difficult for downstream users.”
The October benzene contract price rose 20 cents/gal, despite expected weaker demand in the fourth quarter.
“I was planning on benzene going down for the rest of the year, as were a lot of others,” a phenol buyer said. “All it’s doing is eating away our margins.”
($1 = €0.77)
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