Inadequate Downstream Inquires Decelerate the Market of Phenol in the Mid of Q2 2023

Since the start of May 2023, the prices of Phenol have been continuously dropping across the regional markets. Crude oil prices have been falling as the fresh economic concerns in the United States and China dampened the downstream demand fundamentals. The highest economy in Europe, mainly Germany, has faced soaring inflation, resulting in a wave of strikes as the workforce has demanded better wages to manage the increasing cost of living. Due to economic uncertainties, container availability has been sufficient across the globe, further contributing to the downturn in trade activities of finished goods.

The ChemAnalyst database has demonstrated that the Phenol prices show a decrement of USD 30 per ton on the week ending 12th May 2023, compared to its last week's prices. The property sector in China, which contributes to about 25% of the country's GDP, has shown some indications of expansion in the last quarter, but it is still far below pre-pandemic levels. The factory activities for Phenol have contracted, foreseeing the lackluster demand from the downstream paints and coatings sector. The overall inflationary pressures have remained at low levels in the Chinese domestic market, and the government has also tried to cut interest rates to release more liquidity into the financial system.

Furthermore, In Germany, the manufacturers have kept the prices of Phenol at low levels and avoided any significant development in Phenol prices to keep up with the inquiries from the downstream chemical fibers and solvent industries. Still, high inflation rates have continued to impact the German manufacturing sector, weakening the procurement of input raw materials. On the input energy front, the European TTF benchmark fell to its lowest price, approximately €38/MWH, at April-end. In addition, the cost support from upstream Benzene and Crude Oil was insufficient, and the Phenol market has operated at low levels.

According to the pricing intelligence of ChemAnalyst, the prices of Phenol might sustain a downward trend amidst weak demand fundamentals and declining raw material prices. The prices of input energy raw materials have been slowing down from their all-time high levels, prompting the inflationary pressure to edge lower in Q2, which also might inflict the pricing dynamics of Phenol to remain bearish across the markets.