With supply shortage amid phased lockdown, prices of Phenol likely to surge in China

Phenol prices increased marginally in the Chinese market after a sudden fall witnessed in the week ending 18th March. International tension between Russia-Ukraine and shutdown restrictions in China mainly impacted the prices of Phenol. Besides, transport restrictions to contain the resurgence of Covid in China has severely affected the supplies of various petrochemicals in the regional market. In addition to these crises, an upward crawl in crude prices has caused the price of feedstock (Benzene, Propylene) to rise, which has significantly affected the prices of downstream Phenol.

The continuous rise in COVID cases in China has forced the Chinese government to tighten the transport restrictions to contain the number of cases in the country. Congestion at Chinese ports has been observed in the past week due to which export and import from China has been severely affected. Restrictions over internal transport in major cities like Shenzhen, Shanghai has also delayed trading activities which has eventually led to a rise in petrochemical prices. According to the ChemAnalyst database, Phenol prices were observed at USD 267/ tonne with an inclination of 0.29% in the week ending 25^th March.

The disruption caused by the Russia-Ukraine war has caused crude prices to skyrocket in the previous month, affecting its derivative prices as well. Upstream Benzene and Propylene prices showcased an upward movement from the previous week, which has directly affected the production cost of Phenol. As Phenol is primarily used in the production of plastics, the demand from the end-use industries has registered a continuous rise due to the active pickup in market activities after the Lunar holidays.

As per ChemAnalyst, Prices of Phenol are likely to soar in the upcoming weeks due to the closure of several plants, as China has implemented phased lockdown in Shanghai. Feedstock Benzene and Propylene prices are likely to rise if crude prices continue to skyrocket. Freight charges are also anticipated to rise further if the Russia-Ukraine war continues.