Stable Increase in Hydroquinone Prices Expected in December 2023 Due to Phenol Price Surge
Stable Increase in Hydroquinone Prices Expected in December 2023 Due to Phenol Price Surge

Stable Increase in Hydroquinone Prices Expected in December 2023 Due to Phenol Price Surge

  • 20-Dec-2023 6:53 PM
  • Journalist: Gabreilla Figueroa

In a notable turn of events, the global market is set to witness a stable increase in the prices of Hydroquinone, a key chemical compound widely used in various industries, including pharmaceuticals and photography. The surge is anticipated to impact major exporting regions, with a particular focus on the United States domestic market. The driving force behind this impending price hike is the significant increase in raw material costs, particularly in phenol, a crucial precursor in Hydroquinone production.

As of early December 2023, the prices of phenol experienced a significant uptick, stabilizing in the domestic market of Hydroquinone in the USA. This shift has been attributed to moderate interest from the downstream industries toward the end of the year. Market sources reveal that the prevailing high-interest-rate environment has led to a reduction in purchasing power among a considerable portion of US consumers for Hydroquinone. Despite a decline in the operating rates of manufacturing firms, existing stocks of finished phenol goods have proven sufficient to meet terminal demand including the Hydroquinone market.

Crude oil prices, a key influencer in the chemical industry, have notably decreased in recent weeks, exacerbated by an underwhelming announcement by OPEC+ regarding future production cuts in 2024. Rising U.S. fuel stockpiles beyond seasonal norms have indicated weakening demand, dampening overall market sentiment. Concurrently, an increase in container rates at major ports has been noted, albeit freight rates remain relatively low. Adding to market pressures is the force majeure declared at the Phenol plant of Shell Chemicals in Deer Park, Texas, which has further strained market sentiments.

In anticipation of limited availability of finished stocks, manufacturers have responded by raising Hydroquinone prices. On the input energy front, the decline in crude oil prices has eased manufacturing costs of phenol in the domestic market. However, the support from benzene has been limited, as its prices remained stagnant in the given timeframe.

The impact of these factors on the Hydroquinone market is particularly noteworthy. The reduction in oil prices has contributed to decreased manufacturing costs, providing a cost support mechanism for Hydroquinone in the US market. Moreover, the decline in U.S. inflation, attributed to reduced gas prices, has alleviated the impact of consumer price rises in the country. The U.S. Federal Reserve's decision to maintain its key interest rate unchanged at 5.25%-5.50% for the third consecutive time has further added to the cost support for the Hydroquinone market.

Despite low operating rates, limited availability of finished goods has increased supply-side pressure among manufacturers of Hydroquinone. The Panama drought is also beginning to impact U.S. container imports at East and Gulf Coast ports, with potential exacerbation due to the Panama Canal Authority planning further reductions in daily transit slots. However, the movement of finished goods has, overall, remained unimpeded in the absence of major supply-chain constraints.

In conclusion, the impending stable increase in Hydroquinone prices in December 2023 is a result of a complex interplay of factors, including the surge in phenol prices, decline in crude oil prices, and various market dynamics. Industry participants and stakeholders are advised to closely monitor these developments for informed decision-making in the coming weeks.

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