Note: * = Price range on a zero antidumping-duty basis, subject to 5.5% import duty
Prices rise on limited supply, firm feedstock
The spot prices of phenol in Asia rose for a third consecutive week on the back of limited availability, escalating feedstock benzene and propylene costs and firm domestic values in the China market.
Plant operations at Formosa Chemicals & Fibre Corp’s (FCFC) phenol-acetone facilities in Mailiao, Taiwan, was not affected by a pipeline blast at the site late on 26 July. However, the restart of two of its downstream bisphenol A (BPA) units may face further delays following the fire.
Meanwhile, South Korea’s Kumho P&B Chemicals has yet to achieve full operation at its No 2 and No 3 phenol-acetone units because of mechanical problems. The units are running at 80% capacity, while full operation is expected by the middle of next week.
Nevertheless, the prevailing tight supply is not expected to ease in the third quarter because of a lack of deep-sea cargoes and turnarounds at regional facilities.
Demand in the China market is showing signs of improvement, with end-users heard to be ramping up production to 70% capacity, up by 20 percentage points from May and June, in the wake of low inventories of finished goods, sources said.
The price outlook remained upbeat given a firm China market and bullish sentiment in the secondary India market, where traders emerged to mop up spot molecules in view of tight availability.
China
Spot prices rose by $70-100/tonne, while those on a zero anti-dumping duty (ADD) basis, subject to 5.5% import duty, are assessed as $90-100/tonne higher on the back of deals and buy-sell ideas.
A 2,000 tonne northeast Asian parcel, subject to 3-6% ADD and 5.5% import duty, changed hands at $1,680/tonne CFR China for August shipment.
A 1,000 tonne regional cargo, subject to subject to 3-6% ADD and 5.5% import duty, was sold at $1,690/tonne CFR China for early-August loading.
A separate 2,000 tonne northeast Asian lot, subject to 3-6% ADD and 5.5% import duty, was heard sold at $1,705/tonne CFR China for August loading.
These deals are equivalent to $1,730-1,790/tonne CFR China on a zero-ADD basis, subject to 5.5% import duty.
Offers for European cargoes, exempt from ADD but subject to 5.5% import duty, jumped to $1,800/tonne CFR China for August shipment, against buying ideas at $1,750-1,760/tonne CFR China, in line with prevailing domestic values.
A 1,000 tonne European parcel, exempt from ADD but subject to 5.5% import duty, was booked at $1,755/tonne CFR China for mid-August arrival.
Spot trade was subdued for southeast Asia-origin cargoes, which are exempt from ADD and import tariff. Buyers and sellers acknowledged that prices at above $1,850/tonne CFR China are not workable given the prevailing China domestic prices and the availability of regional and European parcels.
Major Chinese producers Sinopec Gaoqiao Petrochemical and Sinopec Yanshan Petrochemical raised their offers by CNY200/tonne to CNY13,800/tonne EXW and CNY13,700/tonne EXW, respectively.
The prices of imported cargoes in the domestic Chinese market inched up by CNY100/tonne to CNY14,000-14,200/tonne ex-tank in eastern China and were stable at CNY14,000-14,100/tonne ex-tank in southern China.
Separately, June phenol imports into China fell by 18% on a month-on-month basis to 43,772 tonnes. The figure is 15% higher as compared with the same period a year earlier, according to data from China Customs.
Southeast Asia
Spot prices are assessed as up by $60/tonne, mirroring the strong uptrend in China.
Selling ideas jumped to $1,750/tonne CFR SE Asia for bulk lots of 800-1,000 tonnes, while those of smaller parcels and/or material heading to smaller ports were heard at around $100/tonne higher. Trade was muted as end-users retreated to the sidelines in view of the recent spike in phenol costs and lacklustre derivative demand.
Discussions were underway for a 500 tonne lot of southeast Asian origin, with offers heard at $1,850/tonne CFR SE Asia against buying ideas capped at $1,800/tonne CFR SE Asia.
On the ex-tank Malaysia front, prices for August were rolled over from July at $1,760/tonne, sources said.
India
Spot prices rose by $20-130/tonne, triggered by a bullish China market and a lack of fresh offers from the northeast Asian suppliers.
A 2,000 tonne European cargo, subject to $212/tonne ADD, was sold at $1,750/tonne CFR India for August loading.
No firm offer was heard for northeast Asian cargoes, subject to ADD, as sellers withheld offers in anticipation of further price hikes.
Discussions were muted for regional cargoes, which are exempt from ADD, because of tight availability. Buyers and sellers acknowledged that $1,900/tonne CFR India is workable given the prevailing domestic prices. However, there is growing resistance to further price hikes as buyers are uncertain if the sharp uptrend seen in the past couple of weeks can be sustained.
Domestic prices in Kandla retreated by Indian rupees (Rs) 2/kg to Rs96/kg ex-tank as some traders were eager to offload cargoes to lock in profits, sources said.
Feedstock
Spot benzene prices rose by $30-35/tonne to settle at $1,210-1,215/tonne FOB Korea on Friday, while propylene prices gained $5-15/tonne to $1,530-1,570/tonne CFR China.
Freight rates
Intra-northeast Asia freight rates: $40-50/tonne
From Taiwan to southeast Asia: $50-60/tonne
From Pasir Gudang to Bintulu (Malaysia): about $50/tonne
From Pasir Gudang to smaller ports in Malaysia/Indonesia: about $70-100/tonne
From China to India: $70-80/tonne
From Taiwan to India: $60-80/tonne
From Singapore to Kandla (India): $45-50/tonne
From Singapore to Visakhaptnam (India): $60/tonne
($1 = CNY6.44)
($1 = Rs44.08)
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