Americas phenolics chain threatened by upstream volatility

31 January 2013 16:38  [Source: ICIS news]

HOUSTON (ICIS)--The phenolics chain is threatened by volatility in upstream markets, which is likely to remain a long-term concern, a consultant said at the ICIS Pan-American Phenol-Acetone conference on Thursday.

“If you’re a phenol consumer, you have to be watching benzene,” the consultant said. “But it’s going to be difficult to get away from the benzene-based pricing structure.”

Many US and Latin American phenol contracts are based on a benzene-plus model. This is leading to high costs in the market because of record-high benzene prices, especially in the US.

“We’re used to running on low inventories in the chemicals market,” the consultant said. “These low inventories have dropped even further and are causing spikes in benzene prices.”

The consultant said that the three main sources of benzene in the US are all supplying less material.

US steam crackers are producing less benzene because the switch to light feeds is putting less pygas into the market.

US refineries are producing less benzene because their lower operating rates are putting less reformate into the market.

Additionally, toluene disproportionation units are running at lower rates because of weaker demand for paraxylene from the polyester segment.

As a result, the US and South America are becoming more dependent on benzene imports, causing prices to spike in that market and in the phenolics chain.

The other key feedstock for phenol, refinery-grade propylene, is also seeing some volatility.

“Propylene is dominated by polypropylene demand-wise,” the consultant said. “And polypropylene only supports a certain price level.”

The consultant then said that once polypropylene prices reach too high a level, buyers push back and propylene prices fall quickly.


By: John Dietrich
713-525-2600



AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly