Bearish demand-supply dynamics to have a negative impression on Phenol market

Chinese market has been witnessing a continuous drop in Phenol prices from the third week of April with the rising COVID cases in various cities. Moreover, the imports drop, market closure, and transport restrictions have added fuel to the current situation.

The rising COVID cases have created havoc in the Chinese domestic market leading to the closure of manufacturing sites and warehouses. The ongoing pandemic restrictions and a strict zero COVID policy resulted in the termination of production and marketing activities. Furthermore, the upstream crude prices started falling as the reduced consumption from China has affected the market dynamics in the global market. Despite a 20 percent increase in the last two weeks, phenol prices have dropped dramatically in China. As a result, Phenol prices dropped to USD 1555 per MT CFR Qingdao on 22nd April.

China is the major importer of Phenol from Southeast Asia and Far East Asia. The resurgence of COVID has led to severe restrictions affecting the import and export of the material in the Chinese market. As the city of Shanghai suffers an increase in the COVID deaths, stifled transportation, reduced trucking capacity, and labour shortage have further affected the usual flow of economic activities. Hence, delays in trade activities, particularly exports, affected the downstream polycarbonates, epoxies, etc., provoking the buyers to seek supply from other countries. Thus, the ample availability of these products in the domestic market indicated a negative impact on the Phenol pricing.

According to ChemAnalyst, "Expected rise in the lockdown restrictions in China due to the rising COVID deaths might decline the Phenol prices in the forthcoming weeks. Phenol's supply and demand dynamics may drop as lockdown, and transport restrictions are likely to affect Beijing. If the market closure persists, the demand from the downstream industries is expected to drop, showing a downward trend in the Phenol market."