09 October 2012 09:08 [Source: ICIS news]
BUDAPEST (ICIS)--European benzene prices will need to move from their current high levels versus the rest of the world in order to stay competitive, sources in the phenol chain said on Tuesday.
“It’s all about benzene, benzene, benzene,” said a phenol producer.
Speaking on the sidelines of the 46th annual European Petrochemical Association (EPCA) meeting in Budapest, Hungary, the producer said: “It’s simple. Benzene is high, so phenol is high, and this creates demand disruption."
The producer added that regional trade flows are being impacted on, since Europe is the most expensive region for feedstock benzene versus the rest of the world.
Indeed exports of phenol derivatives, such as polycarbonate (PC), adipic acid (ADA) and caprolactam (capro) are no longer being exported to Asia at competitive levels, because prices in Asia are lower than Europe.
Another supplier of phenol said that despite high feedstock costs, 2012 has been a “normal to good year” in terms of demand and profitability.
“It’s been a normal to good year for us and for next year we are still planning the same volumes. But what will happen at the beginning of the year? If prices go high there will be no demand… [but] customers will need to restock,” the phenol seller added.
Meanwhile, downstream buyers of phenol for almost ever derivative market concurred that their demand this year had not been so bad, but margins were suffering because of high feeds.
A phenolic resin producer said: “Resins looks a healthy market when you look into quantities, but margins are a different story, and we have huge problems increasing our prices.”
The resins producer said that a price of €900/tonne ($1,169/tonne) for benzene was acceptable, but €1,000/tonne and above was just “too expensive”.
Phenol producers have said that they have no intention of reducing their prices next year.
For one producer it was a case of “keep calm and carry on”.
Indeed there are no signs that benzene prices will be coming down in the near future.
Bullish crude and naphtha levels mean that crackers will elect to utilise lighter feedstocks, reducing benzene output and keeping prices inflated. Because benzene is high, instead of building up inventory, many derivative producers are weighing up the financial pros and cons of keeping units switched on, opting to purchase material as and when required.
One major European producer of benzene said the high prices will continue.
“These prices are here to stay and the market needs to get used to them.”The annual EPCA meeting runs from 6-10 October.
($1 = €0.77)
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