India's Phenol Market Faces Price Hikes as Phenolic Formaldehyde Resin Manufacturers Ramp Up Production
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Importers have raised phenol prices by ₹3/kg, bringing them to ₹101/kg on an ex-Kandla basis and ₹102/kg on an ex-Dahej basis, with payments required in advance. Some traders are offering phenol at prices between ₹102-103/kg ex-Kandla for immediate dispatch, with 60-day credit terms available.
Price
- Importers have raised phenol prices by ₹3/kg, bringing them to ₹101/kg on an ex-Kandla basis and ₹102/kg on an ex-Dahej basis, with payments required in advance.
- Some traders are offering phenol at prices between ₹102-103/kg ex-Kandla for immediate dispatch, with 60-day credit terms available.
- The price hike is primarily driven by the rising replacement costs and a rebound in upstream crude oil, natural gas, and naphtha prices.
Demand and Supply
- In July 2024, phenolic formaldehyde resin manufacturers—who are the main consumers of phenol—scaled back production due to reduced trading activity and weak demand from plywood manufacturers, a trend exacerbated by the monsoon season.
- However, as we move into August 2024, geopolitical tensions, particularly the conflicts between Ukraine and Russia, as well as Iran and Israel, are creating uncertainties for downstream feedstocks.
- In anticipation of higher replacement costs for phenol during September and October, bulk resin manufacturers are ramping up production ahead of the end of the monsoon season, according to major buyers.
- India's monthly phenol demand is approximately 38 kt, with domestic producers HOCL and Deepak Phenolics contributing a combined output of 23 kt/month, necessitating imports of around 15 kt each month.
- Non-integrated producers are currently facing significant pressure from conversion losses, which is adversely affecting their production rates.
News
- In the international markets, the upstream crude oil benchmark WTI has seen a slight decrease of 0.09%, settling at $77.37/barrel.
- FOB Singapore naphtha prices have dipped to $698/MT, while feedstock FOB Korea benzene is priced at $1,015/MT.
- FOB Korea propylene remains stable at $845/MT. Meanwhile, downstream CFR China phenol prices have dropped to $965/MT.
- Cepsa Quimica is planning to shut its Phenol/Acetone Plant in Shanghai, China. The plant has a production capacity of 350,000 tons/year for phenol and 210,000 tons/year for acetone.
Expert's Opinion
- It is anticipated that phenol prices will remain moderate in the near term, supported by increased downstream demand. Buyers are concerned about potential price surges in upstream crude oil and feedstock benzene, driving them to secure material now.
- The expected rise in replacement costs for importers, coupled with increased production rates of phenolic formaldehyde resins, is likely to keep phenol prices stable to firm.
Daily Market Report
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