Uptick in Europe phenol demand expected to persist into April

28 March 2014 17:15 Source:ICIS News

LONDON (ICIS)--A small uptick in demand in the European phenol market is expected to persist into April, market participants said on Friday.

The increase in volumes seen in March will continue into next month because of better demand from the phenolic resins and bisphenol-A (BPA) industry, sources said.

“Phenol demand has picked up a bit and stays stronger… [People] now say they are less pessimistic, even optimistic,” said one producer.

“March is bit healthier… April, so far, so good,” said one buyer.

Buyers face the prospect of a contract price increase for April, as feedstock benzene is widely expect to settle higher next week.

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

“April contract - we expect a small increase,” said the buyer.

Rising contract prices are traditionally seen as a negative for the industry with phenol producers' margins unchanged and buyers generally squeezed. It also reduces the competitiveness of the European industry globally.

“The whole industry [is] eager to see [the] level drop. Any increase is bad news in a tough market, even though [it is a] small one,” said the buyer.

“[The] phenol price goes up all the time, it will not help us,” said a second buyer.

The rise in demand has led to a small increase in operating rates. However, there are risks to availability with raw materials, particularly cumene, said to be in short supply.

“Cumene is not easy,” said a producer.

“[We are] not turning down rates, [we] are being careful about taking additional orders… Raw material guys are scrambling a bit more,” said a second producer.

Upcoming shutdowns in the US will lead to more export enquiries, one producer said, which could put further pressure on European availability.

By Rhian O'Connor