Demand for phenol and its derivatives has remained low during the mid-February to mid-May period. This is largely because of the weak global economy and lack of European opportunities to export phenol to other regions, particularly China.
Operating rates in Europe have been at around 70-80%, and many buyers of phenol have struggled to fulfil contractual agreements.
A main concern downstream is that the price of major feedstock benzene remains too high, which has caused demand damage, according to many phenol buyers.
Benzene is also much lower in Asia, thereby making the cost of phenol cheaper than Europe. Subsequently, Europe phenol derivatives cannot compete in the Asian markets.
Phenol contract prices continued move with benzene, which moved down in February, up in March, down in April, then up again in May. However, during this whole period, the benzene contract price was either side of €1,000/tonne.
Buyers say that, in the current climate, benzene needs to fall below the €900/tonne mark in order to inject some fresh demand into the market and make downstream products more competitive with other regions.
Demand for key phenol driver polycarbonate (PC) continued to deteriorate over the three-month period.
Updated to mid-May 2013