Tepid Downstream Consumption Decelerates the Pricing Dynamics of Phenol in the Global Market

Hamburg, Germany: The prices of Phenol have gained a downward momentum amid a slowdown in consumption from the end-use industries in late Q1 2023. The demand from the downstream Bisphenol A industries was also observed to be on the lower end and prompted downward pressure on the price realizations of Phenol in the regional markets. On the back of falling energy prices, inflation across the European market has started to ease. In a very competitive labor market, the workforce is raising their wage demands and strengthening their position at the negotiation table. The workers have opted for a strike; as a result, cargo transportation on the country's rail network and ports has also been hampered.

As per the market participants, the inquiries from the downstream market were mainly based on rigid demand in Germany. The market transactions for Phenol were of small orders, and as a result, successive price reductions have been witnessed. The cost support from upstream Benzene was also insufficient. The manufacturers have opted for a price cut as the dual effect of slowing demand and easing input cost inflation have curtailed their profit margins. Moreover, there was sufficient availability of upstream raw materials to ensure regular operating rates of manufacturing firms.

Furthermore, in China's domestic region, the prices of Phenol have demonstrated a decrement of USD 40 per ton on a CFR basis on 31^st March, compared to the prices observed in the first week of March 2023. The offtake from the downstream Bisphenol A was mainly on a need-on-demand basis, leading to price stagnancy of Phenol in the domestic region in the last week. On the supply side, the pressure on the port inventories was moderate, and the supply chain functioned normally. The market has been gradually strengthening; thus, the manufacturers avoided high-price operations. On the other hand, the US market was also weak, and as a result, a downturn was observed in Phenol Demand in the same timeframe.

According to the pricing intelligence of ChemAanalyst, the prices of Phenol might gain upward momentum in the regional markets. The worker's strike in the German market is likely to impact the transportation and logistics in the nation, and as a result, the movement of finished goods will be impeded. Moreover, rising construction activities in the Asian region are likely to boost the Phenol market. Thus, a hike is anticipated in the manufacturer's quotations in the forthcoming weeks.