Global Phenol Market Heads Downward with Weak Demand and High Supplies

October saw continued price declines in the global Phenol markets, driven by weak downstream demand, oversupply, and falling benzene prices across Asia, U.S., and Europe. Phenol prices have declined in October, partly driven by fluctuations in crude oil prices. While crude oil initially rose, a subsequent drop, alongside market uncertainties, pressured feedstock benzene prices lower, contributing to reduced Phenol costs and weakening market demand.

In China, Phenol prices fell further as benzene prices weakened and supply increased from both the Middle East and domestic producers within China. The prices of Phenol CFR Qingdao dropped from USD 1000/MT to USD 900/MT in October 2024, with increased domestic production and ample imports contributing to the bearish market sentiment. The downstream bisphenol-A (BPA) market, facing oversupply and weak demand, also saw price reductions. Export offers from China have decreased, as excess material from upstream producers has impacted pricing. Taiwanese producer Chang Chun plans to restart its Phenol-acetone plant in Jiangsu in late November after a scheduled maintenance period, which may further influence supply dynamics. However, with supply conditions improving and expectations of stabilization, prices are expected to level off in the near term, although demand recovery is unlikely until late 2025.

In the U.S., Phenol prices followed a similar trend, declining due to subdued demand and high inventory levels. Operating rates remained around 60%, with producers unable to take advantage of lower benzene prices due to full storage tanks. Despite a slight increase in bisphenol-A (BPA) prices due to higher upstream Phenol costs, overall demand remained muted, especially from the polycarbonate sector. With weak construction activity, as reflected by a 0.5% drop in September housing starts, Phenol demand in the U.S. is expected to stay low through 2024, with potential market recovery not expected until late 2025. Phenol prices FOB Louisiana were settled at USD 1,092/MT in October.

Meanwhile, in Europe, Phenol prices also experienced a decline, followed by stabilization in mid-October. The weak demand for downstream products such as BPA, combined with fluctuating benzene prices, pressured the Phenol market. The premium of Phenol over benzene in Northwest Europe remained stable, with no significant downward pressure expected unless supply conditions change. Phenol prices have dropped, but buying is slow due to low demand and limited market activity. Additionally, imports from China are expected to maintain an ample supply in the European market, limiting potential price increases.

Looking ahead, the prices of Phenol in China are expected to level off in the near term, although demand recovery is unlikely until late 2025. As for USA, Phenol prices are likely to be on the lower side due to low demand from the downstream construction sector. As of Europe, Phenol prices will continue to decline in the near term owing to ample supply and low demand from the downstream Bis-Phenol A market.