Phenol Prices Surge in Europe and China Amid Rising Costs and Supply Constraints

Hamburg, (Germany):  With the start of the third quarter of 2024, Phenol prices in the European market experienced an upward trend. This increase was driven by rising costs of upstream Benzene and higher Crude Oil prices, leading to increased manufacturing expenses for Phenol. Additionally, lower production rates in previous quarters contributed to supply constraints.  Furthermore, during the first half of 2024, Germany's chemical industry, which includes Phenol manufacturers, reported sales amounting to 112 billion euros ($121 billion). This represents a 1% decrease from the 114 billion euros recorded in the same period the previous year, according to the industry association VCI.

According to the ChemAnalyst database, Phenol prices in Germany's domestic market rose by USD 40 per ton by the week ending 12th July 2024 compared to the beginning of the last month of the second quarter of 2024. The recent sharp rise in Benzene prices, reflecting broader regional supply limitations, prompted market participants to maintain high Phenol prices to protect their profit margins. However, elevated interest rates across Europe have negatively impacted the purchasing power of end-use industries, resulting in decreased procurement of upstream raw materials.

On the other hand, last month in China the limited domestic supply and heightened supply pressure from traders have driven up Phenol prices. In North China, prices also increased by 150 RMB/ton, ranging from 8,300 to 8,350 RMB/ton. This price hike by Sinopec provided robust market support amid limited supply pressure. Sellers set high prices and continued to push them upward, prompting active buyer responses. On the other hand, demand was in lesser volume and cautious buyers constrained themselves from placing higher orders at higher prices, limiting the trade volume. Manufacturing firms have faced operational pressures as the market gradually recovers post-Dragon Boat Festival.  Additionally, spot ocean freight rates from the Far East to the U.S. have surged by 36%-41% month over month, with general rate increases by carriers up approximately 140%. Port congestion continues at major ports in China and Southeast Asia, with Singapore experiencing average vessel wait times of seven days and significant delays at Shanghai and Qingdao.

According to the pricing intelligence of ChemAnalyst, Phenol prices in the European market may continue to rise. Persistent high Crude Oil prices, driven by OPEC+'s decision to maintain production costs in Q3 2024, are expected to pressure manufacturing costs of downstream derivatives, including Phenol. Additionally, market players in Asia are optimistic about increased demand from the downstream Bisphenol A industries and anticipated improvements in demand from the Phenolic Resins sector, which could support Phenol price realizations in the forthcoming weeks.