German Phenol Prices Face Challenges Amidst Lackluster Consumption in November 2023

Hamburg (Germany): Since the start of November 2023, the prices of Phenol have been continuously declining in the domestic market of Germany. The offtakes from the downstream Bisphenol A industries have not been improving, leading to bearish market sentiments for Phenol among the manufacturers. Despite improvements in addressing supply chain bottlenecks, the German manufacturing sector is still experiencing a slowdown due to diminishing demand. Additionally, despite lower inflation from recent European Central Bank policy measures, subdued demand in the construction sector has prevailed, impacting Phenol market sentiments negatively. Consequently, manufacturer quotations have seen a subsequent decline.

The ChemAnalyst database has shown that the price of Phenol plummeted by approximately USD 40 per ton on the week ending 17th November compared to the prices observed at the start of this month. The market players have reported that the downstream industries were unwilling to procure as they already have sufficient availability of finished Phenol stocks in their inventories. In addition, with the decline in upstream Benzene prices, the manufacturing costs of downstream Phenol have been eased, further supporting the downshift observed in the market fundamentals of Phenol.

One of the leading manufacturers of Phenol and its derivatives, BASF Group's third-quarter 2023 sales hit €15.7 billion, dropping €6.2 billion year-over-year due to significantly lower prices in materials, chemicals, and surface technologies segments. Foreseeing the current market scenario, the market players stated that if chemical production does not stabilize, there are risks of a further decline in Phenol volumes and a stronger price reduction than expected in the upcoming months. In addition, the market could refrain from restocking due to subdued seasonal demand towards the year's end.

On the other hand, the availability of input energy materials was also observed to be on the higher end. According to Gas Infrastructure Europe, European gas inventories are 96% full. Natural gas inventories in Europe are placed at +172 terawatt-hours (TWh), way above the 10 year seasonal average. Furthermore, the competitive offers from the Asian countries have also played a crucial part in successive reductions observed in the prices of Phenol.

According to the pricing intelligence of ChemAnalyst, the price trends of Phenol might remain on the lower end as the demand from the terminal market is not expected to recover till the year end. In addition, the approaching destocking season would further prompt the manufacturer to release the inventories at lower prices. However, it is also expected that the downstream customers of Phenol might retain their current stock levels given the typical sluggish demand in the concluding months of the year.