Reduction in Terminal Inquires Dampen the Phenol Price Developments towards Q2-End

Texas, USA:  Throughout the second quarter of 2024, the chemicals industry experienced fluctuating price trends, causing significant shifts among key market players. Benzene prices surged considerably, while propylene, acetone, and Phenol prices remained relatively stable. In Europe, the downturn in residential construction, which constitutes one-fifth of the construction sector, has led to reduced employment within the industry. Several EU nations have seen a decline in the workforce employed in this sector, coupled with the exit of small enterprises from the market.

According to the ChemAnalyst database, the price of Phenol settled at USD 1550 per ton in the week ending June 28. Anticipating reduced inquiries from the terminal market, Phenol manufacturers remained cautious about their profit margins. The European construction sector, historically more resilient during economic downturns, is expected to decline by 2.3% in 2024, as projected by FIEC. Total investment in this sector began decelerating in 2022, with a contraction of 0.3% last year. This downturn could potentially impact Phenol demand, crucial in various construction-related applications such as adhesives, insulation materials, and coatings. FIEC notes that new housebuilding likely decreased by 6.2% last year, with an even steeper decline of 8.6% anticipated by the end of 2024. Including renovation data, the entire residential segment is expected to shrink by 2.9% in 2023 and 5.8% in 2024, further pressuring upstream raw material market fundamentals, including Phenol.

In the USA, inquiries from the domestic downstream construction and automotive industries remained moderate, causing no significant impact on downstream manufacturers procuring Phenol in bulk. Similarly, Phenol demand from the Chinese market was observed to be average. However, support from upstream raw material costs was consistent, and there were ample inventories of finished goods.

Furthermore, crude oil prices recently rose after three consecutive weeks of declines following OPEC+'s decision on June 2. The cartel agreed to maintain existing production limits until the end of 2025, while gradually phasing out additional voluntary cuts of 2.2 million barrels per day starting in October.

According to ChemAnalyst's pricing intelligence, Phenol prices are expected to experience marginal increases in the regional market in the short term. Upward pressure from higher raw material costs is likely to maintain bullish market sentiment in the coming weeks. However, limited improvement in demand from downstream industries such as Bisphenol A may hinder substantial price advancements for Phenol. There are expectation of improvement in volume offtakes from downstream industries including construction in Q3 however reaching pre-covid levels yet to be seen.