Updated to mid-November 2009
Asian market review by Liu Xin, ICIS pricing
Asian phenol spot market reversed its downtrend in late September, bolstered by tight regional availability and a spike in feedstock benzene and propylene values. Operating rates at most regional plants in Japan, Korea and Taiwan were hovering at reduced rates of 80-90%. A major northeast Asian producer cut output further to 60-70% of capacity from mid-November due to poor economics.
The recent hikes in domestic values in the key China market underpinned spot negotiations despite lukewarm demand due to a seasonal production lull. Spot prices were assessed at $1,020-1,120/tonne CFR (cost and freight) China in mid-November, up 2-6.7% from mid-August levels.
The price outlook was largely upbeat given firm feedstock costs and tight supply-demand fundamentals amid recent production cuts, market sources said.
European market review by Julia Meehan, ICIS pricing
The European phenol contract price mirrored developments in the benzene market from the August to November period.
The phenol contract was agreed at €1,238-1,278/tonne FD (free delivered) NWE (northwest Europe) in August, but dropping in September by €168/tonne to €1,070-1,110/tonne because of weaker benzene. Phenol settled at €999-1,039/tonne in October, down €71/tonne because of weaker benzene. In November, benzene increased by €42/tonne and the phenol contact was set at €1,041-1,081/tonne FD NWE.
Export opportunities were non-existent because of the weaker US dollar and lower phenol prices in Asia and the lack of availability in Europe.
European producers continued to run at reduced rates. INEOS Phenol was forced to reduce its production to below 70% during the month of October because of problems with the supply of cumene to both it sites in Gladbeck, Germany and Antwerp, Belgium.
Demand during the three month period was the strongest it had been throughout 2009, particularly for caprolactam and adipic acid. Bisphenol-A (BPA) demand also improved but remained at a very low level. Resin producers also spoke about a mild recovering during October and moving into November.
US market review by Heather McGuire Doyle, ICIS pricing
October phenol prices slipped in the US by 2.6 cents/lb ($57/tonne), in line with the 19-cents/gal benzene drop in the previous month. November phenol prices were expected to increase due to the November benzene increase.
November benzene contracts increased by 9.6% to $2.85/gal, up 25 cents/gal from October.
Despite weak demand throughout 2009, most players have chosen to settle in line with benzene moves in order to secure the necessary phenol supply.
A demand drop off in November is expected as buyers begin to destock year-end inventory.
Sellers have begun curtailing production to match phenol demand. The industry-wide operating rate had been around 60-70% during the third quarter but is now estimated at around 50%.
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Phenol
Uses and Outlook
The main chemical intermediates and derivatives of phenol are bisphenol-A (BPA) used to make polycarbonate (PC) and epoxy resins, phenolic resins, caprolactam, alkylphenols, aniline and adipic acid.
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Phenol was first isolated from coal tar in the coking of coal, but the first commercial process was the sulphonation of benzene and subsequent fusion with caustic soda.
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