Published on March 4, 2014
Spot phenol prices may increase further due to the plant maintenance season and rising prices in the bisphenol A (BPA) sector. Since mid-January, phenol prices in China increased by 2.5 per cent and reached an average of $1,435/tonne CFR China.
Prices rose in spite of significant losses in the main feedstock benzene sector. BPA prices declined by 5 per cent to reach at an average of $1,298.50/tonne FOB Korea.Since mid-January, BPA prices were up by 2.7 per cent to settle at an average of $1,654 tonne/CFR China.
China is likely to witness a number of maintenance shutdowns, which is expected to lead to increased phenol prices.
Taiwan’s Chang Chun Plastics started their maintenance turnaround season and in mid-February the Kaohsiung phenol/acetone plant was shutdown for maintenance. The plant is expected to remain closed until mid-March.
PTT Phenol (Thailand), Formosa Chemicals & Fibre Corp (FCFC; Taiwan) and Mitsui Chemicals (Japan) have decided to shutdown their phenol/acetone plants for maintenance in March.
In China, Sinopec Shanghai Gaogiao and Sinopec Beijing Yanshan will carry out scheduled maintenance turnaround at their units between February and April.
The maintenance turnaround season will lead to supply shortage, which has prompted end-users in Taiwan and southeast Asia to look for spot cargoes. Demand from India continues to be steady. India is a net importer who buys nearly 16,000-18,000 tonnes of material a month. This trend has encouraged Asian phenol producers to increase their offers to $1,550-1,600/tonne CFR China on a zero antidumping duty (ADD) basis.
East China saw a rise in domestic phenol prices, which increased to an average of yuan 9,850/tonne ex-tank in the week ended 21 February. This was the first price rise since October 2013.
Domestic phenol prices are expected to increase by a further CNY300-400/tonne. The busy maintenance turnaround season in China and across the region will lead to tight supply. However, demand is not expected to be lower than it already is. But, domestic prices in China remained low relative to the US dollar-denominated spot offers.
The considerable gap between prices of locally-produced and imported phenol has prompted Chinese importers to import material for distribution in the duty-exempt, bonded or re-export sector.
There are certain market participants who have maintained a less bullish outlook as the increasing phenol exports from China and lower operating rates at some BPA plants have improved availability of the material in the spot market, thereby reducing the impact of a busy plant turnaround season.
Taiwan Prosperity Chemical Corp (TPCC) has delayed the restart of its 100,000 tonne/year BPA plant in Linyuan due to mechanical issues. The plant is likely to start operations from mid-March. This delay has pushed the company to export its surplus feedstock phenol for shipment in February and March.
Increased phenol export has tightened supply to domestic buyers in China. Also, the decline in benzene prices in China may push Chinese phenol producers to use their spare capacities and increase their output.
The phenolic resins sector is the major consumer of phenol in China. This sector is, however, facing difficulties due to the slowdown in the housing and construction sectors.
