Europe phenol demand stable despite lower benzene price

12 April 2013 13:21  [Source: ICIS news]

LONDON (ICIS)--European demand for phenol is unchanged from last month despite a €62/tonne ($82/tonne) drop in the value of feedstock benzene, producers and consumers said on Friday.

“I think simply saying nothing is happening in the [phenol] market is too easy. What I see on benzene is that the lower price has not led to an increase in demand,” said a large phenol buyer.

“Between this year and last year there is a huge gap in the price of benzene. The nylon industry is still suffering tremendously from high benzene prices. To kick-start this industry we need substantially lower benzene prices and these [price] fluctuations are not helping.”

The benzene contract price in January 2012 was €862.50/tonne FOB (free on board) NWE (northwest Europe) and settled at €1,153/tonne FOB NWE in January 2013.

In relation to its phenol demand and the cost of benzene, a second buyer said: “Benzene did not stimulate demand. You need to look beyond the last two months and look at the last 12 months when [benzene] prices increased. Our [phenol] prices have decreased a little, but it’s not had much impact on our demand because feedstock prices are still at a high level.”

The buyer added that despite planned shutdowns and reduced operating rates on phenol, it could source all the volume it needed.

“From what I see nobody has any issues to supply material and everybody is happy if I take additional volume.”

In Europe, Italy’s Versalis has a planned outage this month and INEOS Phenol will shut its facility in Antwerp, Belgium, from the middle of May until mid-June for a planned turnaround.

European operating rates for phenol have been at 70-80% since the middle of July 2012 because of declining demand in Europe and Asia for phenol and its derivatives.

A third buyer consuming phenol for nylon intermediates said the phenol market felt “extremely quiet”, with the drop in benzene having no impact on its downstream demand.

“For us some applications are still suffering and it’s not good in certain countries. Engineering plastics is doing okay but the automotive situation is not good and volumes are below their usual levels. But textiles are doing quite well,” the buyer said.

“From March and April the situation has got better but I think May will be flat with April,” the buyer concluded.

Producers concurred that their demand for phenol was no better or worse because of benzene.

“Nothing really has changed. Demand is the same,” said one producer.

A second producer described its phenol demand as steady, but in relation to the high cost of benzene and its impact on demand, it said: “This is the new normal – get used to it. What people are really watching is credit risk and working capital.”

($1 = €0.76)

By: Julia Meehan
+44 20 8652 3214

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