Deepak Phenolics Resumes Operations; Indian Phenol Prices See Price Correction

Key Highlights

• Price Trends: Domestic prices from Deepak Phenolics are quoted at ₹92.50/kg (Ex-Dahej).
• Supply & Demand Dynamics: Stable supply supported by consistent vessel arrivals.
• India’s demand: ~38,000 tons/month, with 15,000–17,000 tons met through imports.
• Market Sentiments: Downward pressure from lower feedstock prices, such as Benzene ($860/MT) and Propylene ($810/MT).
• Industry Updates: Haldia Petrochemicals is expanding its Phenol production capacity to 345,000 tons/year.

Chemicals Price: Week-on-Week Phenol Price Trends

• Importers have reduced Phenol prices by ₹2.5/kg, bringing them down to ₹92/kg (Ex-Kandla) for 60-day payment terms. Similarly, authorized dealers of Deepak Phenolics are quoting ₹92.50/kg (Ex-Dahej) on the same payment basis.

• Bulk purchase inquiries have been observed in the range of ₹88-90/kg (Ex basis) with extended credit terms of 90 days. However, both importers and domestic manufacturers remain reluctant to trade at these lower price levels.

• On a week-on-week basis, Phenol prices have softened by ₹4.5/kg, attributed to increased supply and mixed market sentiments. In the Asian market, CFR China Phenol benchmark prices remain steady at $885/MT.

Chemical Supply & Demand: Key Drivers and Impacts

• Supply levels during September and October were stable, supported by consistent vessel arrivals. The temporary shutdown of Deepak Phenolics in October helped stabilize prices, preventing a steep decline.
• However, November witnessed sharp corrections in feedstock prices, such as Benzene and Propylene, driven by a bearish trend in upstream Crude Oil and Naphtha, which significantly reduced replacement costs.
• As the monsoon off-season ends, demand from plywood manufacturers is projected to recover, potentially driving Phenol consumption. Despite this, bulk buyers remain cautious about building inventory due to continued weakness in upstream markets, according to a leading importer.
• Deepak Phenolics resumed operations on 27th October 2024 following its temporary shutdown, which is expected to bolster domestic supply. While current market sentiments are bearish, a rebound in Crude Oil and Naphtha prices could alter the outlook, with seasonal demand likely to rise steadily until June 2025.
• India’s monthly Phenol demand stands at approximately 38,000 tons. Domestic producers, including HOCL and Deepak Phenolics, contribute around 23,000 tons, leaving a shortfall of 15,000-17,000 tons, which is fulfilled through imports.

Chemical Market News: Feedstock Trends and Industry Updates

• In the global market, upstream Crude Oil prices (WTI benchmark) have risen slightly by 0.39%, reaching $69.51 per barrel. FOB Singapore Naphtha prices are steady at $626/MT.
• Feedstock trends show a decline, with FOB Korea Benzene prices decreasing by $5 to $860/MT and FOB Korea Propylene at $810/MT. Meanwhile, CFR China Phenol prices remain firm at $885/MT.

Plant NEWS

• LG Chem, a prominent Isopropyl Alcohol (IPA) producer in Yeosu, South Korea, plans its annual maintenance during the second half of December 2024. The plant’s production capacity is 105,000 tons per annum.
• PetroChina Jilin Petrochemical restarted its Propylene cracker on 22nd October 2024 after a shutdown in late August. The plant has an annual production capacity of 80,000 tons of Propylene.
• Haldia Petrochemicals, a leading Phenol and Acetone manufacturer in India, has signed an agreement with Lummus Technology to expand its Phenol production capacity from 300,000 tons/year to 345,000 tons/year. Ofbusiness Insights

Expert Opinion: Seasonal Recovery and Price Outlook

Forecasts suggest that Phenol prices will likely remain under pressure this week due to surplus inventory, lower replacement costs, and weak upstream Crude Oil and Naphtha prices. However, expected seasonal demand recovery from the plywood sector may offer some price support, potentially curbing further declines in the market.