US November phenol contracts settle with benzene change

30 November 2012 17:44  [Source: ICIS news]

HOUSTON (ICIS)—US November phenol contracts have settled equal to the change in November benzene contracts, sources confirmed on Friday.

With November benzene contracts gaining 50 cents/gal, US November phenol contracts increased by 6.79 cents/lb ($150/tonne, €115/tonne).

This puts ICIS-assessed November phenol contracts at 94.39-98.84 cents/lb FRT RQ (freight equalised), up from October’s levels of 87.60-92.05 cents/lb.

“We tried to get something better than the benzene change, but producers weren’t having it,” a phenol buyer said. “Once customers start seeing these big increases we might see some order curtailments.”

Producers said getting the full benzene change was necessary because November benzene was at a record high.

“Buyers have to pay the benzene costs or it’s not economical for us to make more,” a producer said. “And it’s looking as though buyers can pass the costs down to their customers.”

Other sources agreed, saying that much of the weakening demand for phenol is tied to seasonal factors rather than high costs.

There is some hope, buyers said, that a rebound in demand will come in the first quarter of 2013, and could couple with falling benzene to restore their margins.

Buyers cautioned that while phenol prices continue to increase, volumes are lower, so the effects of high costs are not being felt fully.

Sources said that supply of phenol is steady, and that the recent surges in benzene haven’t forced them to lower operating rates further.

With operating rates in the 70-80% level, buyers said supply is not an issue because producers could fill any shortages easily.

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

($1 = €0.77)

By: John Dietrich

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