Despite Seasonal Demand, Indian Phenol Prices Dip as Imports Flood the Market

Key Highlights

1. Price Decline: Phenol prices fell by ₹2-3/kg amid strong imports, with bulk inquiries at ₹81-82/kg for February shipments.
2. Supply & Demand Dynamics: Despite seasonal demand, buyers avoid stockpiling due to ample supply, favoring just-in-time purchases.
3. Market Trends: Rising benzene and propylene prices may impact future phenol production costs.
4. Industry Updates: Haldia Petrochemicals plans to expand phenol capacity to 345,000 TPA, signaling long-term supply growth.

Phenol Prices Drop Amidst Ample Imports

• Phenol prices have been reduced by ₹2/kg by importers, now quoted at ₹83/kg (Ex-Kandla) for 60-day payment terms. Authorized dealers of Deepak Phenolics are offering prices at ₹82.50/kg (Ex-Dahej) under similar payment terms.
• Bulk purchase inquiries are being placed in the range of ₹81-82/kg (Ex-basis) with extended credit terms of 90 days for February 2025 shipments.
• On a weekly basis, Phenol prices have softened by ₹3.00/kg due to increased imports.

Market Dynamics: Balancing Supply and Demand 

• Supply remains ample with continuous vessel arrivals during January and February 2025. Despite the seasonal demand uptick, the Phenol market continues to trend downward with bearish sentiments, as both domestic manufacturers and importers face liquidation pressure.
• However, rising feedstock prices, particularly Benzene and Propylene, are expected to keep production costs elevated for Phenol and Acetone manufacturers.
• Plywood manufacturers, the primary consumers of Phenol, are operating at a good production rate, driven by seasonal demand. This demand could provide some support for Phenol prices until the season ends.
• Despite strong seasonal demand, bulk buyers and traders are reluctant to build inventories due to the ample supply. Most buyers are opting for just-in-time procurement instead of stockpiling, as observed by a leading trader.
• India’s monthly Phenol demand stands at approximately 38,000 tons. Domestic producers, including HOCL and Deepak Phenolics, supply around 23,000 tons, leaving a shortfall of 15,000–17,000 tons, which is met through imports.

Rising Feedstock Costs: Impact on Phenol Production 

• Globally, upstream Crude Oil prices (WTI benchmark) have declined slightly by 0.44%, settling at $71.81 per barrel. 
• FOB Singapore Naphtha prices remain steady at $658/MT. Meanwhile, FOB Korea Benzene prices are at $920/MT, and FOB Korea Propylene is at $820/MT. 
• CFR China Phenol prices remain stable at $890/MT.

Industry Expansion: Haldia Petrochemicals Boosts Capacity

• 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 per year to 345,000 tons per year.
• INEOS Phenols Singapore has restarted its Phenol/Acetone Plant after outage. The Plant is located in Pulau Sakra, Singapore with Phenol production capacity of 310,000 Tons/Year and Acetone capacity of 185,000 Tons/Year.

Expert Outlook: Will Phenol Prices Rebound Soon?

Expert anticipates that Phenol prices will remain bearish in the short term. However, a potential rebound is likely due to rising feedstock prices and strong downstream demand. Buyers should consider inventory-building opportunities whenever prices hit a low.