Europe March phenol contract rises €14/tonne in line with benzene

01 March 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--The European March phenol contract has moved up by €14/tonne in line with the same price increase of major feedstock benzene, sources confirmed on Friday.

The March pre-discounted phenol contract price settled at €1,618-1,658/tonne ($2,101-2,153/tonne) FD (free delivered) NWE (northwest Europe). The March European benzene contract settled at €1,054/tonne FD NWE.

The dynamics of the phenol market have stayed broadly unchanged from previous months, with supply sufficient enough to meet the low levels of downstream demand.

Phenol production also remains at a low level for the majority of producers. However, improvement has been seen downstream, albeit small, according to some buyers of phenol.

A customer purchasing phenol for the nylon intermediate markets said: “Business is running and we got some increases in our internal demand. We are buying more than we took in February and January.”

Despite low operating rates in Europe, the buyer said it had no problem finding the material it needs.

Producers confirm that demand is still low, but say they have seen some mild improvements.

One producer said: “We have increased rates because we are backing up some lost sales. We had problems in December and January and we ran at low rates and lost production. Now we are back to standard volumes and rates have moved up to fill the back log.”

However, the producer added that there had be no “strong” signs of demand increasing from key phenol derivative bisphenol A (BPA).

“The reality is BPA [makers] produce less but have increased their margins. So there is no reason to produce more [BPA],” the producer added.

Another producer said it has not seen a “huge change” in its demand for phenol in Europe or Asia, but the US market was showing some “small” signs of improvement.

Caprolactam is running well but BPA is still struggling,” the producer said.

A third producer said that its customers were taking normal phenol volumes, but its customers continued to view the wider business environment as tough.

“I was with some resin customers and they said they will run their plants and see what happens. While they will always say times are tough, one assumes it’s not tough enough to cut back,” the producer added.

The phenol contract in Europe is largely linked to feedstock benzene price movements, although a quarterly fee, also known as the adder, can be an influencing factor for some producers and consumers in Europe. Annual fees are also in place.

($1 = €0.77)

By: Julia Meehan
+44 20 8652 3214

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