Europe December phenol contract price up €109/tonne

06 December 2013 23:59 Source:ICIS News

LONDON (ICIS)--The European December phenol contract price has increased by €109/tonne ($147/tonne) following the same increase in the value of major feedstock, benzene, sources said on Friday.

The contract settled on a pre-discounted basis at €1,512-1,561/tonne FD (free delivered) NWE (northwest Europe).

The European December benzene contract was agreed at €957/tonne FOB (free on board) NWE.

A hike in the benzene contract price was described as “a disaster” by many sources involved in phenol.

A major buyer said: “This hike in benzene is completely overdone. It’s nothing to do with fundamentals.

“We need to get out of this benzene plus – it’s just killing everything - our December volumes will be down because of the heavy benzene increase.”

On the selling side, a major producer said phenol customers had “backed orders” and were taking minimum volumes because of the benzene hike.

“Phenol people have backed orders. November has become the new December - December is really slow.

“They are taking minimum volumes - the increase on benzene and the consequence of benzene has stopped the [phenol] market,” the producer said.

Speaking about the benzene increase, a major phenol buyer said: “It’s ridiculous. It’s killing us - we cannot cancel [orders] - we need to serve customers - we have to swallow the losses.”

“It’s depressing,” it added.

Phenol operating rates have been reduced since July 2012 because of a lack of phenol exports to Asia, weak macroeconomic conditions and poor demand for major derivative bisphenol A (BPA).

Phenol operating rates in Europe are estimated to be running at circa 60-70%.

The phenol contract in Europe is largely linked to feedstock benzene price movements, although a quarterly fee, also known as the adder, is also an influencing factor for some producers and consumers in Europe.

($1 = €0.74)

By Julia Meehan