India’s Phenol Market Faces Pressure Despite Seasonal Demand Optimism

Key Highlights

• Phenol price reduced by ₹1/kg, now ₹88/kg (Ex-Kandla, 60-day payment terms).
• Seasonal demand from plywood manufacturers expected to increase gradually until June 2025.
• Haldia Petrochemicals plants expansion of Phenol production capacity to 345,000 TPA Recovery in plywood sector demand could stabilize the market in the near term.

Phenol Price Trends: Weekly Insights

• Phenol prices have been reduced by ₹1/kg by importers, now quoted at ₹88/kg (Ex-Kandla) for 60-day payment terms. Authorized dealers of Deepak Phenolics are offering prices at ₹88.50/kg (Ex-Dahej) on similar payment terms.
• Bulk purchase inquiries are being made in the range of ₹86/kg (Ex basis) with extended credit terms of 90 days for November month shipments.
• On a weekly basis, Phenol prices have softened by ₹4.00/kg due to increased supply and mixed market sentiments.

Demand Recovery & Supply Stability in the Phenol Market

• Supply levels remained stable during September and October, supported by consistent vessel arrivals. The temporary shutdown of Deepak Phenolics in October helped prevent a sharp price decline, maintaining stability.
• However, in November, sharp corrections in feedstock prices, such as Benzene and Propylene, were observed. These were driven by a bearish trend in upstream Crude Oil and Naphtha markets, significantly lowering replacement costs.
• With the monsoon off-season concluding, demand from plywood manufacturers is expected to recover, potentially boosting Phenol consumption. Despite this, bulk buyers are hesitant to build inventories due to ongoing weakness in upstream markets, as noted by a leading importer.
• Deepak Phenolics resumed operations on 27th October 2024 after its temporary shutdown, which is anticipated to strengthen domestic supply. Although current market sentiments remain bearish, a rebound in Crude Oil and Naphtha prices could shift the market outlook. Seasonal demand is likely to increase steadily until June 2025.
• 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 deficit of 15,000–17,000 tons that is met through imports.

Crude Oil and Feedstock Market News

• Globally, upstream Crude Oil prices (WTI benchmark) have risen slightly by 0.32%, reaching $68.99 per barrel. FOB Singapore Naphtha prices remain steady at $623/MT.
• Feedstock trends indicate a decline, with FOB Korea Benzene prices dropping by $5 to $880/MT and FOB Korea Propylene at $780/MT.
• Meanwhile, CFR China Phenol prices are stable at $885/MT.

Plant News: Key Developments in Phenol and IPA Production

• LG Chem, a major Isopropyl Alcohol (IPA) producer in Yeosu, South Korea, is planning its annual maintenance in 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 facility has an annual production capacity of 80,000 tons of Propylene.
• Haldia Petrochemicals, a prominent 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.

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Expert Opinion: What Lies Ahead for Phenol Prices?

It is anticipated that Phenol prices will remain under pressure this week due to surplus inventory, lower replacement costs, and weak upstream Crude Oil and Naphtha prices. However, an expected recovery in seasonal demand from the plywood sector may lend some support to prices, potentially mitigating further market declines.