Phenol Prices Surge in Germany as Crude Oil Prices Soar and Supply Constraints Intensify

Hamburg, Germany: The prices of Phenol have been consistently rising in the domestic market of Germany. International Crude oil prices are on the upswing, driven by speculations of extended production cuts by OPEC+ nations. There's an expectation that Saudi Arabia will continue to decrease its oil production by another 1 million barrels until October, leading to further supply constraints and potential price increases in the oil market, subsequently reflecting in the production costs of several petrochemicals, including Phenol. In addition, the slowdown in the manufacturing sector in the past few months has also been weighing upon the inventory level of Phenol. As a result, the manufacturers have opted for price revision to secure their profit margins.

As per the ChemAnalyst database, the price of Phenol has demonstrated an inclination of USD 40 per ton in the week-ending 15th of September, compared to the prices observed at the start of this month. The rising costs of upstream Benzene have contributed to the increase in Phenol prices. Market sources have noted an uptick in inquiries from downstream Bisphenol A industries. Additionally, the European Central Bank (ECB) will continue to assess its decisions on a meeting-to-meeting basis to manage inflation effectively. This suggests there could be a halt in September and the possibility of raising rates at the October or November meetings if inflation persists longer than expected in their efforts to meet their specified target.

Furthermore, according to the Association of Chemical Industries, the petrochemicals and polymers sectors experienced 21% and 19% declines, respectively. In the chemical-pharmaceutical industry, sales saw a significant drop in Germany and internationally due to declining orders, as reported by the industry association. Overall, in the industrial sector, first-half earnings totaled €114 billion, marking an 11.5% decrease compared to the previous year. Domestic sales were down by 15.5%, while foreign business saw an 8.5% decline. This series of events has negatively impacted the market performance of Phenol across the European market.

On the other hand, In the Asian market, the prices have been rising amid supply-side concerns brought on by the limited availability of Phenol. As per the market sources, LG Chem, one of the leading manufacturers of Phenol, has undergone a maintenance shutdown. Similarly, Formosa Chemical Corp. and Fibre underwent an unplanned shutdown in China in August. In addition, Bluestar Harbin Petrochemical Corp has also undergone a maintenance shutdown, leading to limited availability of Phenol in China.

According to the pricing intelligence of ChemAnalyst, the prices of Phenol might gain momentum on the back of rising Crude Oil prices across the international market. With lower production rates, the availability of Phenol is also likely to remain on the lower end, exacerbating the supply-side concerns. In addition,  the market players were optimistic about the growth of Phenol in Q4 amid the strong demand from the Asian markets.