Europe October phenol follows benzene down by €28/tonne

05 October 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--The European phenol contract for October has decreased by €28/tonne ($36/tonne), following the same reduction in the benzene settlement, buyers and sellers said on Friday. 

The contract settled on a pre-discounted basis at €1,562-1,602/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 factored in for some producers and consumers.

The fee, also known as the adder, has rolled over from the third to fourth quarter, according to sources.

While the fee over the benzene contract price is rarely disclosed, estimates are between €250-300/tonne on a free delivered  basis for large contract partners.

Phenol operating rates in Europe remain at reduced levels because of poor demand from downstream markets, including bisphenol A (BPA) for the production of polycarbonate (PC) and epoxy resins.

Nylon intermediate markets, such as caprolactam and adipic acid, are struggling with high feedstock costs in Europe compared to Asia and have reduced nylon operating rates.

A phenol buyer for this sector said: “The competition in Asia is getting stronger everyday because feedstock costs in Asia are much cheaper. We can’t compete with Asia.”

Bucking the trend appears to be the phenolic resins market which is the second largest derivative sector for phenol.

One resin producer said September had been its strongest month in terms of demand.

“Our production is at 100%. September we got lots of orders and our resin production is at its highest level all year.”

($1 = €0.77)

By: Julia Meehan
+44 20 8652 3214

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