Phenol Prices collapse on poor buying sentiments – 9 Dec 2014

India’s Phenol market is under pressure since oil prices receded to five-year low, with US crude trading below $63/bbl and Brent crude at around $65/bbl . Phenol demand in the country is also waning amid lacklustre trading conditions in the market. Herdilia descended its phenol prices consecutively for the fourth time, with price fainting by Rs.26 per kg to Rs.88 per kg in less than eight weeks.

HOCL unit in Kochi also resumed the production in late October after a gap of about six months. This increased the supply in the market, forcing prices to drop further. The unit has a capacity to produce 40,000 tonnes of phenol. Phenol’s main users are bisphenol-A (BPA), phenolic resins, caprolactam, adipic acid and plasticizers. Almost all caprolactam produced goes into the manufacture of Nylon-6 which is widely used in fibers and plastics. Plastic and fibre market is currently going through a downtrend. Similarly plasticizers (DOP/DBP) demand is quite dull at the moment, and the same trend may continue in the coming months.

A source informed indianpetrochem.com that phenol stock available at Kandla port is around 16500 metric tonne while at Mumbai Port the solvent available in less quantity i.e, 1250 metric tonne." Thus, Demand is falling at a rapid pace while there is ample supply. Overall, buyers appeared hesitant to purchase more as market remained uncertain of the near-term direction of phenol prices. Market players expect Phenol prices to fall further, dragged down by a good supply and weak crude prices.

Purchases being limited to small quantities (since buyers are keeping low inventory) indicate that prices will continue to fall. Our sources in the industry warned of a build-up in inventory, with not much improvement in downstream demand. A good supplied Phenol market, together with a bearish upstream market might continue to add a downward pressure prices.

Last quoted booking price of Phenol was $ 1,150 per metric tonne. Currently, Phenol prices are being traded at Indian rupee Rs.79-81 per kg ex-tank in Kandla.