EPCA ’22: Europe phenol, acetone outlook gloomy but should improve in H2 2023

BERLIN (ICIS)–There is no doubt that the Q4 outlook for phenol and acetone is worrying, a sentiment confirmed by delegates at the EPCA conference in Berlin.

However, opinions as to how long the downturn might continue were mixed.

“I really have no idea how long all this will last – but there are ideas somehow limited to six months of a bad market,” one distributor said.

A producer added: “We all expect a better H2 to H1 – and I think we all know this downturn will be better than we originally thought it would be.”

The European Petrochemicals Association (EPCA) annual meeting was the first in-person gathering since 2019; it is the key networking event in the European petrochemicals industry.

Many delegates talked of the gas impact.

“If Europe manages over winter, the panic impact will be reduced,” one phenol buyer commented.

Another source talked of a “crisis of sentiment” in Europe, but added that things might not be too bad if the Chinese economy picks up – if measures are put in place to incentivise it – before the US economy dips.

“Q4 will be slow, but from Q2 onwards it could be better,” a phenol and acetone producer commented.

“In Q1, phenol and acetone demand could be lower leading to some uncertainty. There has been some reduction contract-wise, minus 10 to 15%  for next year. Customers can’t commit 100% to contract to meet demand and are ready to buy spot for the rest,” the producer added.

On phenol, one reseller suggested that customers do not want to be too exposed to gas formulas in contracts, so they may take less on contract. Another phenol buyer said that next year, volumes would easily be found for any unexpected demand.

In the meantime, a buyer explained that it did not want to change its purchasing procedure and intended to stick with contracted volumes, albeit predicted lower.

“Maybe we need fewer suppliers, ” it added.

Delegates were curious to see how governments might react to the high gas prices; Cefic has asked the EU to implement a cap on natural gas prices.

Benzene is not an issue, one source suggested, as “refiners should run stronger next year.”

Supply chain constraints have eased, which could open up markets to imports some suggested.

The impact of new phenol and acetone and derivative capacity in China will not impact the European market until H2 2023 or 2024, one source suggested.

In general, distributors were not as downbeat as producers about the months ahead.

“We are not too pessimistic about next year as we are not as exposed as producers,” said one.

The EPCA annual meeting ran on 4-6 October.

Front page picture: Dark clouds hang over the rooftop of a residential building during sunset in Berlin, in September
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