US spot phenol trading activity thins on high benzene

21 November 2012 16:23  [Source: ICIS news]

HOUSTON (ICIS)--Trading activity for US spot phenol has continued to thin because of record-high feedstock costs, sources said on Wednesday.

Producers and traders agreed that attempting to move spot phenol based on November benzene is uneconomical.

“You can’t do spot phenol; it won’t make you any money,” a trader said.

Sources said that spot phenol made with November benzene would require a selling price of 66-67 cents/lb ($1,455-1,477/tonne, €1,135-1,152/tonne) on an FOB (free on board) basis just to break even with benzene costs.

However, traders said they are seeing bid levels from Asia in the $1,460-1,485/tonne level on a CFR (cost & freight) basis, which would track back to $1,390-1,395/tonne FOB.

Selling at those levels would leave US traders and producers losing 3-4 cents/lb relative to their benzene costs.

Additionally, demand for spot phenol in Asia is soft because of end-of-the-year inventory controls and weak economic conditions.

“Everyone is being squeamish on the hopes that benzene will fall,” a producer said. “But demand is sputtering.”

The continued fall in spot phenol demand and sales is expected to keep operating rates in the US lower than normal.

Major US phenol producers include Dow Chemical, Georgia Gulf, Haverhill Chemical, Honeywell, INEOS Phenol, SABIC Innovative Plastics and Shell Chemical.

($1 = €0.78)

By: John Dietrich

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