Chinese Phenol Moved Sideways around the Bottom Line

Introduction: The Chinese phenol market showed a downtrend in May. Up to May 18, 2018, the reference negotiation prices for phenol in East China were in the range of RMB 9,600-9,650/mt, down RMB 950/mt or 8.98% from early May.

After the declines in recent days, the Chinese Phenol market was expected to continue move sideways around the bottom line given the fundamentals and coming influencing factors.  

From the supply side, the phenolic ketone unit at PetroChina Jilin Petrochemical was shut for maintenance. The supply of phenol was tight only in Northeast China. The phenolic ketone unit at Cepsa CHemical was scheduled to undergo maintenance for a short term, but the influence on phenol supply was limited. On the whole, the phenol supply won’t be tight with the recovery of phenolic ketone unit finishes the maintenance. In North China, the slightly tight supply had eased with the maintenance of BPA unit in Mitsubishi Chemical Holdings (Beijing). In June, the supply will be ample if the unit in CNOOC and Shell Petrochemicals produces phenol normally. Some players were bearish about the coming market.

Besides the sufficient supply, the tepid demand also weighed on the Chinese Phenol market. In Jiangsu, some phenolic resin producers’ production was influenced. The maintenance of some BPA units also restricted the demand for phenol. Moreover, the demand for phenol from Cyclohexanone didn’t see improvements.

In June, influenced by the SCO Summit in Qingdao, the demand for phenol in North China will be limited. In the short term, the demand for phenol won’t see obvious increases. But, with the declines in prices, downstream users may stock up. Most users will purchased on a need-to basis.           

Finally, from the production cost, the Chinese benzene market prices were low to promote the sales, which couldn’t support the phenol market.

On the whole, it is difficult for the phenol market prices to move up in the short term. Prices may inch down.