Phenol prices have been on a downward trajectory from past few weeks in both European and North American markets, mirroring the decline in benzene prices. The weakening demand from downstream sectors like construction and automotive has led to fewer market inquiries and price fluctuations.

While the supply of benzene, a key feedstock for Phenol production, has been adequate, the low demand has prompted producers to exercise caution. This has contributed to the further decline in Phenol prices. The ongoing slump in crude oil prices has also exerted pressure on Phenol prices. Brent crude futures dropped by USD 1.63, or 2.24%, to USD 71.06, the lowest since December 2021. West Texas Intermediate (WTI) oil futures for the United States also declined, falling USD 1.48, or 2.14%, to USD 67.67.  

Market sources indicated that Phenol prices have been steadily decreasing in line with the drop in benzene prices. The decline in Phenol prices is likely to have implications for downstream industries that rely on this chemical, such as the resins, plastics, and fibers sectors.

Meanwhile, Ocean freight rates from Asia to North Europe have continued to fall, dropping by 2% to USD 7,770/FEU (Forty-Foot Equivalent Unit) in the week ending September 6th. This decline reflected a combination of factors, including a slowdown in demand and longer transit times. The demand-side pressure on prices eased somewhat as the arrival window for peak season commodities closed for shipments to North Europe and the Mediterranean. This was due to longer transit times along the southern African coast and the anticipation of a slowdown in China during Golden Week.

Despite the recent decline, ocean freight rates from Asia to Europe remained significantly higher than earlier this year. Prices were currently five times higher than in July, although they have already decreased by 10% in North Europe and 19% in the Mediterranean. The ongoing volatility in ocean freight rates highlighted the challenges faced by shippers and logistics companies navigating the global supply chain. While the decline in rates offered some relief, the overall cost environment remained elevated compared to pre-pandemic levels.

In the USA, the trend was somewhat similar. Phenol costs have decreased this week in the United States because of the construction sector’s muted demand. Phenol, a crucial component of many construction materials, was being consumed less as a result of the slowdown in construction activities. The market was also oversupplied with finished Phenol products, which was another factor driving the price reduction. Amid the uncertain demand outlook, downstream businesses, such as producers of resins and plastics, have been reluctant to make large acquisitions. This cautious strategy was motivated by worries about possible overstocking and fluctuating market circumstances.

As per ChemAnalyst Pricing Intelligence, Phenol prices are expected to continue their downward trajectory in the coming weeks. The ongoing decline in demand from downstream sectors such as construction and automotive is likely to persist, putting downward pressure on Phenol prices. The reduced demand for Phenol-derived products, such as resins, plastics, and fibers, will limit the need for Phenol feedstock.