The European Phenol market experienced a surge in mid-February 2025, with FD Hamburg prices rising by around 1.3%.

One key factor was the increase in feedstock costs, Benzene, a crucial ingredient in Phenol production, saw a 2.3% price rise in early February, directly impacting the production costs of Phenol. This cost increase, coupled with already tight product availability, added upward pressure on prices. Rising energy costs throughout this timeframe significantly increased production expenses, adding to the upward price pressure on Phenol prices.

Despite the weekly gain, Phenol pricing level stayed at lower than usual. The overall market situation is characterized by a considerable oversupply of chemicals in Europe. A recent report by the European Chemical Industry Council (Cefic) revealed that a staggering 11 million tons of chemical production capacity, encompassing 21 major facilities, are slated for closure. This significant downturn underscored the challenges facing the European chemical sector, impacting the demand and pricing of numerous chemicals, including Phenol. The oversupply is exacerbated by sluggish demand growth, resulting in a global utilization rate of only 75% for key chemicals in 2023. Cefic projected this low utilization rate to persist between 74% and 76% until 2028, unless substantial market restructuring or a significant demand rebound occurs. The closures of naphtha cracking plants, representing approximately 5% of Europe's total cracking capacity, further complicated the situation by disrupting the supply chain for downstream chemical industries, impacting the availability of raw materials for Phenol production.

The weak demand for Phenol was further compounded by the struggles within the European construction sector, a major consumer of Phenol-derived products. The construction sector, which uses Phenol in the production of phenolic resins for applications such as plywood, oriented strand board, furniture, and insulation materials, entered 2025 in contraction, although the rate of decline has slowed compared to previous months. New orders continued to fall sharply, leading to job losses and decreased purchasing activity. Germany, in particular, data showed significant weakness, with its construction industry projected to shrink by 0.5% in 2025. High inflation, rising material costs, and elevated interest rates were major contributing factors. The residential sector has been especially hard-hit, and the overall market outlook remains pessimistic, with firms expecting weak demand and high costs to continue. The reduced construction activity directly translated into lower demand for Phenol and its derivatives.

As per ChemAnalyst, the outlook for Phenol pricing in Europe, remains uncertain. The confluence of factors – increased production costs, tight supply, weak demand within the construction and broader chemical sectors, and ongoing economic headwinds – suggested that price volatility is likely to continue in the near term.