US Phenol Prices Edge Higher Amid Active Demand From the Terminal Market in Early Q4 2023

Texas, USA: In recent weeks, Phenol prices in the USA's domestic market have steadily increased. This uptick has been fueled by heightened inquiries from Bisphenol A industries, boosting market sentiments. Furthermore, concerns about the Phenol supply side have emerged due to the OPEC+ nations' production cuts and the concurrent increase in Crude Oil prices, impacting downstream petrochemical sectors. As a result of reinforcing downstream demand and a rise in raw materials prices, the manufacturers have raised their Phenol prices to secure their profit margins.

The ChemAnalyst database has shown that the Phenol prices have registered an increment of USD 20 per ton in the week ending 06th October. The inquiries from the downstream Bisphenol A industries have been accelerating, albeit slower. Although considering raw materials, the prices of Benznene remained stagnant amid stabilized operations in the US market.

Furthermore, US manufacturing made progress toward recovery in September with increased production. In order to meet the downstream demand, the operating rate of Phenol manufacturing firms has also been stabilizing. Despite economic challenges in the US, construction activity has remained robust due to several factors supporting spending in both residential and nonresidential construction, strengthening the demand for fundamentals of Phenol among the manufacturers. In addition, even with elevated raw materials, Phenol prices, and persistent labor shortages, most downstream market players predict growth in their profit margins within the next six months.

On the upstream front, As per the market sources, Extending Saudi Arabia and Russia's output cuts through year-end will maintain a substantial market deficit for Phenol manufacturing into Q4 2023. OPEC+ output fell by 2 mb/d this year, partially offset by higher Iranian flows, while non-OPEC+ supply reached a record 50.5 mb/d by August, increasing by 1.9 mb/d. The increase in production by non-OPEC+ has counterbalanced the market in the third quarter of 2023, as reported by market participants.

According to the pricing intelligence of ChemAnalyst, the prices of Phenol might gain upward momentum in the US market. The market players are optimistic about the improvement in demand from the downstream Bisphenol A industries and the construction sector. Additionally,  The Federal Reserve is also moving away from additional rate hikes, and there's a possibility that its tightening stance might be abandoned by Q4-end, which will further contribute to alleviating the pressure from the manufacturing firms. However, the low operating rates of manufacturing firms in the previous quarters are also likely to have a considerable impact on the price realizations of Phenol in the forthcoming weeks.