Phenol Market Trends: Price Declines, Supply Stability, and Seasonal Demand Outlook

Key Takeaways:

• Phenol prices in India have dropped by ₹2/kg in response to stable supply and soft market sentiment.
• Bulk buying interest persists, but prices remain high due to caution from suppliers.
• Demand is expected to rise post-monsoon, with limited downside supported by the plywood sector.

Chemicals Price: Phenol Price Movements in the Domestic Market

• Importers have reduced Phenol prices by ₹1/kg, bringing them to ₹96/kg (Ex-Kandla) on 60-day payment terms. Authorized dealers of Deepak Phenolics are offering prices at ₹95/kg (Ex-Dahej) on an advance payment basis.
• Bulk purchase interests have been noted in the range of ₹92-94/kg (Ex basis) with 90-day credit terms. However, both importers and domestic manufacturers are currently unwilling to trade at these lower levels.
• On a week-on-week basis, Phenol prices have declined by ₹2/kg due to increased supply and mixed market sentiments. In the Asian market, the benchmark CFR China Phenol prices have decreased by nearly $10, reaching $885/MT.

Chemical Supply & Demand Trends

• Supply levels during September and October were stable, supported by frequent vessel arrivals. However, the temporary shutdown of Deepak Phenolics in October helped stabilize Phenol prices, preventing a significant drop. In November, prices of key feedstocks like Benzene and Propylene have experienced sharp corrections, influenced by a bearish trend in upstream Crude Oil and Naphtha prices.

• With the end of the monsoon off-season, demand from plywood manufacturers is expected to pick up, potentially boosting Phenol consumption. However, bulk buyers remain cautious about stocking inventory due to the ongoing weakness in upstream markets, as noted by a leading importer. Deepak Phenolics, which resumed operations on 27th October 2024 after a temporary shutdown, is expected to increase the supply of Phenol in the domestic market.

• While current market sentiment remains bearish, any rebound in Crude Oil and Naphtha prices could shift the scenario, with seasonal demand anticipated to rise consistently until June 2025.

• India's monthly demand for Phenol is estimated at 38,000 tons, with domestic producers HOCL and Deepak Phenolics contributing around 23,000 tons. This leaves a demand gap of 15,000-17,000 tons, which needs to be filled through imports.

International Chemical Market Updates and Price Trends

• In the international market, upstream Crude Oil benchmark WTI prices have decreased by 0.35%, reaching $67.80 per barrel.
• FOB Singapore Naphtha prices have declined by $11, standing at $627/MT.
• Feedstock prices have also shown a downward trend, with FOB Korea Benzene dropping by $5 to $865/MT and FOB Korea Propylene priced at $810/MT.
• The downstream CFR China Phenol prices have fallen by $10, now at $885/MT.

Chemical Plant Maintenance and Production Updates

• LG Chem, a major manufacturer of Isopropyl Alcohol (IPA) located in Yeosu, South Korea, is scheduled to undergo its annual maintenance from the second half of December 2024. The plant has a production capacity of 105,000 tons per annum.
• PetroChina Jilin Petrochemical, a key Propylene cracker that was shut down at the end of August, resumed operations on 22nd October 2024. The plant has an annual production capacity of 80,000 tons of Propylene.

Expert Opinion: Short-Term Outlook for Phenol Prices

It is expected that Phenol prices are likely to remain bearish this week due to surplus inventory, lower replacement costs, and weak upstream Crude Oil and Naphtha prices. However, the expected seasonal demand from the plywood industry may provide some support, preventing further price corrections in the Phenol market