Updated to mid-August 2009
Asian market review by Liu Xin, ICIS pricing
Asian phenol spot prices were stable-to-firm from early-June till mid-August, supported by the rise in feedstock benzene and propylene values. Despite lukewarm downstream demand due to the seasonal production lull, regional producers maintained a strict price discipline as they were trying to recoup profit margins.
The spikes in feedstock numbers had prompted some producers to cut production as they were unable to pass down the escalating production costs. Market participants acknowledged that there was limited price downside for phenol in the near term given the prevailing feedstock values and tight availability. Nevertheless, sluggish demand and lacklustre domestic prices in the key China market continued to weigh on the market.
Spot prices were assessed at $1,000-1,050/tonne CFR (cost and freight) China in mid-August. Buying interest was subdued as the prevailing domestic prices pegged import equivalent for phenol in China at around $900/tonne CFR China, industry players said.
European market review by Julia Meehan, ICIS pricing
The European phenol contract price mirrored developments in the benzene market from the May to August period.
In May, the phenol contract price settled at €933-973/tonne FD (free delivered) NWE (northwest Europe), up €58/tonne. Benzene firmed again in June by €86/tonne which brought the June phenol contract price to €1,019-1,059/tonne. In July, the phenol contract settled up again at €1,150-1,190/tonne marking an increase of €131/tonne. In August phenol settled at €1,238-1,278/tonne FD NEW, up €88/tonne.
Phenol spot prices also mirrored developments in the benzene spot market moving up €305/tonne from €778-823/tonne FD NWE to €1,083-1,128/tonne FD NWE during the three month period.
Export opportunities were non-existent because of weaker US dollar and lower phenol prices in Asia.
European producers continued to run at reduced rates despite an upturn in downstream demand. European production was estimated at 65%.
US market review by Heather McGuire Doyle, ICIS pricing
Although demand remained weak in the US phenol sector, July contract phenol prices increased by 7.87-8.00 cents/lb ($174-176/tonne) since the majority of contracts are now formula-based and tied to benzene costs. The July hike follows a 6-cents increase in June.
Of greater concern to players was the August phenol price since feedstock benzene has surged for another month. US August benzene contracts settled at $3.65/gal, marking the fifth increase of 23% or greater for 2009.
A phenol seller said the formula contracts were not helping margins since volumes consumed were still much weaker than one year ago.
While phenol prices can be managed with the benzene formula, there is no way to control how much volume the buyers take, a seller said. Buyers are not taking material, so margins remain weak, another seller said.
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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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