Quarterly Update on Global Phenol Market
For the Quarter ending June 2021
Overall Phenol market outlook in the North American region improved along with the recovery of the industrial infrastructure in the USA Gulf Coast during the second quarter of 2021. Phenol supplies picked up in the region, owing to the restarting of several production units with better operating rates and ample availability of the upstream Benzene. However, some producers were still struggling to operate the Phenol facilities at normal rates. Demand outlook strengthened as the enquiries were piled up from the downstream Nylon, Epoxy Resin and Polycarbonate production facilities. Despite a marked slowness in the automotive demand, the building and construction sectors remained the key demand drivers. The Phenol pricing trend in North American region eased during the second quarter of 2021, with FOB Texas discussion settling at USD 1635 per tonne in June.
Phenol market outlook in the Asia Pacific region observed mixed sentiments throughout the second quarter of 2021. Despite the devasting impact of the second COVID wave in several Indian states, the domestic Phenol market witnessed limited hinderance in the local supplies. Supplies in Northeast China were significantly curtailed due to the turnarounds at several producing facilities. South Korean Kumho P&B line 3 and Japan’s Mitsui Chemicals Phenol facility in Sakai were temporarily shut for planned maintenance during May and June. Demand in the China remained firm in Q2 owing to consistent offtakes from the downstream automotive and construction sector with strong economic revival. The pricing trend continued to maintain an uptrend, extending record surged in upstream Benzene pricing. Phenol FOB Dalian prices rose to USD 1555 per tonne levels in June.
During the second quarter of 2021, Phenol supplies in the European region were balanced to tight owing to turnarounds at several manufacturing facilities. Some ease in import supplies was witnessed due the improved inflows from the US. Demand observed a seasonal push from the construction sector, whereas enquiries from the downstream automotive sector showed marginal improvement in the second quarter. The prices of Phenol in the European market took an uptrend amidst the supply demand imbalance and global inflation in the prices of upstream Benzene. Progression of vaccination programs raised hopes of the quick revival in downstream sectors.
For the Quarter Ending March 2021
During the first half of the quarter, Phenol supplies were severely impacted by the plant turnarounds as two upstream cumene plants went for turnarounds resulting in feedstock shortage. Due to the severe freeze weather conditions in the US gulf region, production outages further resulted in record spike in the prices of Phenol. Shutdown of US-based Olin Corp. in mid-February affected market supplies. The performance of housing sector drove the demand of Phenol, as an extensive infrastructure plan helped the non-residential sector growth. CFR Texas prices took a big hit in March, surging above USD 2570 per MT in the week ending 19th March. Some Phenol supplies was also directed to Europe amid tight global supply.
Phenol supplies in Asia Pacific, initially in the quarter improved as the several manufacturing plants ended their maintenance turnaround periods and started operating at their normal efficiencies. However, supplied remained tight for some weeks as some Chinese players curtailed operations during the Chinese Lunar Year. The demand remained high as market could see restocking practices in mid-March to fill the inventories, followed by resurgence consumption from the Phenolic Resin manufacturers. By-product Acetone remained high in demand. This high demand and normal supply pushed up the regional prices of Phenol. The quarterly average of the prices of Phenol in India stood around USD 1204/ton in the market, whereas the CFR prices for Q1 deliveries were assessed at USD 1016/ton.
The supplies of Phenol in the European region remained constrained in first half of Q1, as the several major plants were on a maintenance turnaround since last quarter, further carried by the slowdown in industrial and commercial activities due to slump in the economy of European region amid fresh lockdown imposed due to second wave of COVID. The demand however surged from the downstream sector, as the automotive sector slowly recovered in the region. Offtakes of Phenolic resins were good with rising demand from the construction sector which later fell toward the end of Q1.
For the Quarter Ending September 2020
Market sentiments of the Asian Phenol Market remained under doldrums pressurized by supply overhang due to massive capacity additions of 400 KTPA from China’s Zhejiang Petrochemicals. The situation was exacerbated by the resumption of operations in Japan’s Osaka-based Mitsui Chemicals and Chung Chun PC of China followed with no news of any new turnarounds till the end of next quarter. Furthermore, manufacturers across the Northern Asia operated their plants at nearly full capacities but the inventories of the products remained manageable with strong offtakes for certain derivatives.
Even after production from several major manufacturers was curtailed to curb supply overhang, the market witnessed surplus cargoes of Phenol as downstream industries made no prominent gains. Although two of the renowned producers Domo Caproleuna and Seqens underwent a maintenance turnaround but it was not enough to revive the dull offtakes of Phenol in the European market. As resurgence of Coronavirus continued to impact the automotive sector, demand for its major derivatives Bisphenol A and Caprolactam remained dampened with low hopes of recovery by the next quarter.
Phenol market outlook in North America remained balanced as turnarounds implemented from leading producers like SABIC and Shell, outstripped the excess supply. Since Asia was already flooded with Phenol supply after massive capacity additions from China, export potential of North America reduced to a significant percentage with diminished demand from its major consumers. Although several downstream sectors like automotive and construction showcased promising hopes of recovery, players were cautious over prevailing demand uncertainties on consistent rise in coronavirus number in some parts of the region.