Amidst Terminal Market Challenges, German Phenol Prices End October 2023 With Bearish Trend
- 30-Oct-2023 3:48 PM
- Journalist: Patricia Jose Perez
Hamburg, Germany: The decline in demand from the downstream Bisphenol A industries has been weakening the market sentiments of Phenol in the European region. The European chemical industry has been greatly affected by recent escalations in the Israel-Palestine conflict, ongoing Russia-Ukraine tensions, and shifts in the global energy market. These geopolitical events have led to continuous fluctuations in chemical raw material prices and impacted the terminal demand on a broader level. In addition, despite the downbeat outlook due to the underwhelming performance in recent quarters, many prominent domestic chemical plants have synchronized their scheduled maintenance shutdowns as the demand from the downstream industries has remained lackluster.
At the start of this month, the rise in energy prices has prompted upward pressure on the manufacturing cost of Phenol; as a result, a rise has been observed in the manufacturer's quotations. However, the weak demand from the downstream construction sector has dominated the Phenol market sentiments, causing the price realizations of Phenol to drop. The ChemAnalyst database has shown that the price of Phenol has decreased by USD 30 per ton on the week ending 27th October compared to the prices observed in the middle of this month. Moreover, with the declining inflationary pressures and ease in raw materials costs. The Ifo business climate index increased to 86.9 in October, marking its first monthly gain since April, compared to the 85.8 recorded in September.
Furthermore, in China, in early October, the price of the raw material of Phenol, Pure Benzene, experienced a substantial decrease due to a significant drop in Crude Oil prices during the Golden Week holiday period. This sharp decline in Crude oil significantly affected the entire petrochemical industry supply chain, causing a subsequent decrease in prices for downstream products, including Phenol. On the other hand, as per the market sources, the Bisphenol A manufacturing Plant of Sinopec Mitsui Chemicals at Caojing, Shanghai, China, with a capacity of 120,000 mt/year, has been operating at lower run rates amidst the weaker demand fundamentals further imposing downside risks to the demand dynamics of upstream Phenol.
According to ChemAnalyst, the prices of Phenol might gain momentum in the middle of the fourth quarter of 2023 in the European market. Amidst the winter season, the consumption of energy materials might escalate, which may drive the supply-side concern in the European market. Moreover, with tight monetary policies, the inflationary pressures are also expected to settle down, alleviating the pressure from the purchasing power of the end-use industries of Phenol in the near term.