26 February 2014 22:06 [Source: ICIS news]
HOUSTON (ICIS)--The US February phenol contract range has settled marginally higher, as premiums declined again this year even as February benzene exerted upward price pressure, sources confirmed on Wednesday.
The full effect of the February benzene change would have moved phenol up by 3.39 cents/lb ($75/tonne), but the 2014 phenol adder, or premium to benzene, averaged about 3 cents/lb lower than in 2013, according to most sources who negotiated new contracts either late last year or in January of this year.
The result was a month-on-month phenol increase of 0.39 cents/lb, which took the February price to a new range of 87.88-92.33 cents/lb, as assessed by ICIS.
“Producers push for higher adders, and buyers push for lower adders,” a market source said. “Setting the price based on an adder over the volatile benzene feedstock is simply a way to reduce the need to negotiate price every month.”
Sources said that adders are at historic lows because producers are contending with poor phenol economics including soft demand and more than ample supply. In the US, phenol production rates are still averaging 65-70%, according to most sources.
Demand from housing, which uses phenolic resins, is uncertain, sources said. And until the markets get a clear indication of downstream health, recovery is tentative at best, a buyer added.
Housing statistics are mixed.
US home prices rose by 11.3% in 2013 compared with 2012, a Standard & Poor’s (S&P) housing survey indicated this week, but that news has a potential downside.
In Q4 2013, the S&P home price index declined by 0.3%, in contrast to gains during the first three quarters of last year, reflecting a slowdown in month-to-month growth and indicating that the strongest part of the recovery in home values may be over, an S&P source said.
Major US phenol producers include Axiall, Dow Chemical, Haverhill Chemical, Honeywell, INEOS Phenol and Shell Chemical.
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