17 January 2013 19:50 [Source: ICB]
Polycarbonate producers spoke about a slow start to the year, saying the benzene contract had impacted demand
The increase in January's Europe benzene contract price settlement has dampened demand for phenol and phenol derivatives, market sources said.
The January benzene contract price also settled €69/tonne higher. Buyers of phenol for derivative markets all spoke about the difficulty of passing on the benzene increase, simply because demand was not strong enough. One buyer in the polyamide chain described the feedstock increase as "suicide". In the nylon market, prices rolled over despite the benzene hike.
"All companies must increase prices otherwise it's better to stop production. We're in a situation that's no good at all," the nylon maker added.
Another nylon producer said: "We see an increase again on benzene. There's a necessity through the chain to increase prices. We'd like to see rises of €100/tonne on polymer, this depends on demand."
Bisphenol A (BPA) for the production of polycarbonate (PC) remains the main driver for phenol production and since there are no strong signals coming from this market that demand is improving, phenol operating rates in Europe remain low.
Polycarbonate producers spoke about a slow start to the year, saying that the benzene contract settlement had done nothing to fuel demand - in fact, it had done quite the opposite.
One major PC producer said: "We are very concerned about the benzene increase. It will kill demand. It's terrible - it's going to be very difficult because we can't pass this on." A second major buyer of phenol for PC production described its demand as "very low".
On the sell side, producers also acknowledged that high feedstock costs were not helping demand. "Buyers have no other choice than to buy the phenol. With the price level right now - we are killing our customers. Everybody is running on low inventories, but we are more or less used to it," said one major producer.
Mark Victory contributed to this article
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