Europe phenol producers see improved market conditions into March

28 February 2014 14:43  [Source: ICIS news]

LONDON (ICIS)--European phenol producers on Friday said they are optimistic business in March will be better than in the previous two months following signs of an improvement in market conditions.

“We are seeing some tightness in phenol - operating rates are [likely to be] five points higher in March than January and February,” said one major producer.

One producer said this might be the result of some lingering logistics issues from January and early February when storms across Europe created shipping disruptions.

However, most thought the improvement was down to a simple increase in demand. The improvement was said to be felt most in bisphenol A (BPA), and other larger-volume (non-niche) applications like phenol-formaldehyde resins.

Buyers of phenol confirmed the market was looking a little more positive, with Asian BPA shutdowns lowering competition and some improvement in end markets.

“Volumes are stable or slightly improving, we are carefully optimistic. Asian competition is not disappearing - but it’s not increasing at least,” said one buyer for the resins market.

One BPA producer said it will easily be sold out in March, something it had not seen in a long time.

Added to this optimism is the hope that phenol prices for March could settle down, following settlement of the benzene contract expected later on Friday.

The phenol contract price is determined by the benzene price and an additional fee or adder, which is usually determined on an annual basis. The benzene price is widely expected to settle down, which should lead to stable margins for phenol producers, but improved margins for phenol buyers.

“Benzene down is good for phenol,” said a second producer.

Lower phenol prices would also improve the competitiveness of European phenol vs cheaper Asian product.

“I don’t want to risk a loss of volumes to imports. If the euro phenol prices are too high, imports are a  threat,” said the producer.

By: Rhian O'Connor
+44 208 652 3214

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