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3 February 2017

Phenol
Europe
Chemical Prices |  News |  Analysis  Editor: Luke Milner

CONTRACT PRICES 
Price Range One Year Ago US CTS/lb
FD NWE FEB EUR/tonne +177 1572.00-1607.00 +177 1130.50-1170.50 76.93-78.65

SPOT PRICES 
Price Range Four Weeks Ago US CTS/lb
FOB R'dam T2 Export  USD/tonne n/c 980-1000 n/c 790-820 44.45-45.36
FD NWE  EUR/tonne +180 1160-1180 +180 980-1000 56.77-57.75
Ex-Works Russia  RUB/tonne +2000 82000-88000 +4000 80000-83000 63.07-67.68

NOTE: Please click here for full details on the criteria ICIS pricing uses in making these price assessments.

Subscriber note: ICIS is currently consulting readers about the exchange rate of €1 to $1.0630.
methodology used for this report. To respond please go to:
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The largely inactive phenol spot market in Europe is calm as
Overview February gets underway, with the market continuing to focus
on long-term contractual agreements.
-Contract prices rise in February
However, following the increase in key feedstock benzene’s
-Concern over impact of higher prices on demand contract price in February, phenol spot prices have risen.

-Availability continues to meet demand Export spot prices have remained unchanged, however, with
market participants seeing little space to export and little
Contract incentive to do so when comparing domestic prices to those
achievable in export markets.
European phenol contract prices have risen in February,
following an increase in key feedstock benzene’s February Supply/Demand
contract price.
Demand for phenol has been healthy as January drew to a close
Phenol contract price movements and February got underway.

However, several market participants have questioned how


phenol demand will develop throughout February.

One producer said that good demand was given a further boost
in the last days of January as buyers looked to secure material
ahead of February price increases.

This producer added that phenol demand has been better in


early 2017 than it was in the same period of 2016.

However, a second producer said that the February increase in


key feedstock benzene, which has been fed through to the
phenol market, has already had a negative influence on
demand.

This producer said that price levels meant buyers would not
look to build up stocks but would instead use existing stocks,
where possible.

This was echoed by two buyers that separately said they would
The phenol contract price range for February has risen, when
be using their existing stocks during February.
compared to January, in line with the rise in benzene.
One buyer said that while it had some room to alter order
The phenol contract price follows benzene’s monthly price
volumes it would not be able to mitigate the impact of the triple
movement with an adder or fee on top. While some market
digit price increases, which it said could not be passed on to its
participants negotiate adders annually or semi-annually, others
own customer base.
negotiate adders on a quarterly basis.
A phenol producer said that concerns over passing down price
The benzene settlement was agreed at a US dollar concept of
hikes were impacting the phenolic resins market in particular.
$1,045/tonne and converted to the euro price at an agreed

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Phenol Europe
However, another buyer said that it would be buying as normal Downstream
in February.
Bisphenol A (BPA): BPA spot prices in Europe have continued
Phenol availability continues to meet demand, with market to rise under pressure from upstream price increases and
participants continuing to enjoy a relatively well balanced tightening supply. Demand for BPA is good as February gets
market. under way. Following price rises in Asia, Asian BPA has been
considered less competitive and this has led to a reduction in
It remains to be seen how demand will develop during the imported material arriving in Europe, reducing overall
month. availability in the European market.
Russia Caprolactam: The European January caprolactam contract
price has settled at increases based on higher feedstock costs
Spot phenol prices were up this week.
and strong demand. According to players, material could be
Russian phenol price movements looking tighter but there was no issue with caprolactam
availability.

Upstream
Benzene: The European benzene contract for February was
confirmed at €983/tonne this week, an increase of €177/tonne
from the previous month. The settlement was agreed at a US
dollar concept of $1,045/tonne and converted to the euro price
at an agreed exchange rate of €1 to $1.0630. Despite the
bullishness for February, the market remains steeply
backwardated and many aromatics players are unsure whether
the current pricing structure is sustainable given the wide
naphtha/benzene spread.

Propylene: The European propylene contract price for February


settled at an increase from January primarily on feedstock
gains, an expected tighter supply-and-demand balance and
firmer global market conditions. Currently, the market is well-
balanced with the resolution of most derivative issues having
removed any excess length from the market. Spot prices are
Bulk buyers noted sharp increases in formula-based phenol talked firmer but little trade is seen.
contract prices for February, by more than Rb10,000/tonne. As
Crude oil: Crude futures prices were up over the week. Initially,
a result, formula-based contract prices approached or even
gains followed a drop in the US dollar value due to concerns
exceeded Rb90,000/tonne. One bulk buyer confirmed the
over US President Trump’s comment that the euro was
formula-based price of phenol produced by Ufaorgsintez at
significantly undervalued. Signs that OPEC members and Russia
Rb91,300/tonne for February.
were complying with agreements to curb output added further
Subsequently, spot phenol prices also moved up. However, spot upward pressure. However, increases were limited by
numbers remained at levels below formula-based contract unexpected increases in US crude and oil product stocks.
prices. Towards the end of the week, news that the US was considering
new sanctions against Iran added additional support to prices.
Russian domestic prices include 18% VAT. *Afternoon trading

Asia
Crude oil 3 Feb * 27 Jan 20 Jan 13 Jan
The underlying supply/demand fundamentals in China have ICE Brent 56.74 55.52 55.49 55.45
been bolstered by the reopened arbitrage to India, made WTI 54.33 53.17 53.22 53.15
possible by the earlier domestic market slump and the recent
CFR India price run-up.

The recent improvement in Chinese buying interest, ongoing


spot buying interest in Taiwan, alongside sturdy Indian demand,
are lending support to the supply/demand fundamentals in
Asia.

Even prior to a fresh production issue in South Korea, a number


of market participants had described the market as balanced.
There is limited spot availability from producers, with negative
margins also curbing producers’ interest to export material, a
trader pointed out.

Some market participants are expecting the Asia market to


tighten up in the near term, with March potentially being the
tightest month in terms of cargo availability in 2017.

ICIS accepts no liability for commercial decisions based on the content of this report. Unauthorised reproduction, onward transmission or copying of  Phenol (Europe) in either its electronic or hard copy format is
illegal. Should you require a licence or additional copies, please contact ICIS at sales.uk@icis.com.
Phenol (Europe) |  3 February 2017 |  www.icis.com

Phenol Europe

FEEDSTOCK CONTRACT PRICES 


Price Range One Year Ago
Benzene
CIF NWE FEB EUR/tonne +177 983.00-983.00 +177 550.00-553.00

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