Amidst Immense Economic Uncertainties, the US's Phenolic Resin Market Remains Under Pressure
- 30-Jun-2023 11:41 AM
- Journalist: Nicholas Seifield
The Phenolic Resin market in the USA exhibited a slight decrement throughout June 2023 owing to various factors ranging from domestic economic conditions to deteriorated global demand outlook and many more.
Consumption declines as the cost of everyday goods and services rises due to inflation. Loans and mortgages become more expensive as interest rates rise, which harms household and business spending. Although inflation has moderated in the United States to 4.9%, central banks still find it uncomfortably high, even though they aim for 2%.
In the first week of June, Novolac Phenolic Resin FOB Louisiana prices stood at USD 5100 per tonne, which faintly declined by 0.6% to USD 5070 per tonne in the week ending on 9th June 2023. Again, in the next two weeks, the prices of Phenolic Resin dropped by 0.4% and 0.6%, respectively, and settled at USD 5050/MT and 5020/MT.
Throughout this month, the cost support from the feedstock Phenol was weaker as the prices declined by nearly 1.2%, adding to lower production costs. The aromatic organics market, such as Toluene, also observed a slowdown this month as the prices dropped by an average of 1.8%.
The downstream automotive and construction industry are the major driving factors for the Phenolic Resin markets. Phenolic Resins' market expansion in the United States will ultimately be influenced by the automotive industry's rapid transition from internal combustion engines to electric vehicles, which is undergoing a once-in-a-century transformation.
However, the market sentiments for Phenolic Resin are also gloomy due to geopolitical turmoil in Russia as the war continues. Global trade is affected by such situations, whereas the supply chain is stressed due to the growing geopolitical tension between China and the USA. Although Washington's continuous efforts to cut its economic ties with China under a misguided "decoupling" agenda. The economic strain between the USA and China is becoming increasingly apparent, with trade shrinking by nearly 14.5% from January 2023 to May 2023.
Similarly, in Europe, the prices of Phenolic Resin are also continuously declining in the Q2 of 2023 owing to deteriorated market sentiments and sluggish downstream demand. Despite the relief in the energy prices, weaker demand for Phenolic Resin continues to affect the price trend: the firm inflation rates and continuous rises in interest rates to beat heavily impacted the demand fundamentals. Meanwhile, the competitiveness from the Asian market builds up pressure on enterprises manufacturing Phenolic Resin in the European region.
In Germany, the month-on-month prices of Phenolic Resin fell to USD 5630/MT in April from USD 5690/MT in March, a drop of 1.1%. Again, the prices of Phenolic Resin declined by 2.3% and settled at USD 5500/MT in May 2023.
According to the ChemAnalyst database, the Phenolic Resin market in the USA is presumed to showcase mixed market sentiments in the near future, majorly due to the possibility of an interest rate hike by the US Fed, amidst which the ease of doing business is anticipated to agonize the market giants.