Market surprised by sudden surge in India's demand for phenol in last two months, prices propel

The sudden surge in India's demand for phenol over the last two months has taken the market by surprise and propelled phenol prices, both in India as well as in the rest of Asia, as per Platts. International phenol prices in India have jumped well over 20% since January with a notional deal level being at around US$960-970/mt CFR India now, industry sources said this week. Strong demand from India has also put upward pressure on prices elsewhere in Asia, sources said. The CFR China marker was assessed at US$810/mt last Tuesday, up US$55/mt or 7.3% since January 12. The phenol marker was assessed at US$865/mt CFR Southeast Asia, US$75/mt higher over the same period. Demand in India increased as end-users looked to replenish inventories before the government introduced the latest round of antidumping duties in March. As much as 20,000-25,000 mt will likely be loaded in March alone from China, Taiwan and South Korea collectively to India compared with the usual 9,000-12,000 mt each month from these markets taken together, industry sources said. Besides end-users in India, other buyers in Asia were also heard to be scouting for cargoes for April for the India market. "I have interest to buy if someone can sell but supply is so tight," a China-based trader, who is also targeting India, said. Another trader was willing to buy at US$870/mt FOB China late last week to sell to India. "Currently, we have a shortage because of the steady stream of inquiries. Many traders want to buy for India as the market is so lucrative," a producer in Northeast Asia said. Upcoming and ongoing turnarounds are also crimping supply. Mitsui Phenols Singapore shut its solvents plant February 22 until end-March for scheduled maintenance. The plant can produce 310,000 mt/year of phenol and 180,000 mt/year of acetone. South Korea's Kumho P&B Chemicals was heard to have shut its No. 2 and No. 3 lines at its Yeosu solvents plant in early March. The lines, which have a combined capacity of 380,000 mt/year of phenol and 250,000 mt/year of acetone, will likely restart in the first half of April, a source close to the company said. Taiwan's Chang Chun shut its phenol-acetone plant in Kaohsiung from February 22 until end-March for planned maintenance. It can produce 300,000 mt/year of phenol and 180,000 mt/year of acetone. Further constricting supply, plants in China were heard to be operating at 60%-65% of capacity on average, sources said, noting that this also helped put upward pressure on prices. Adding to this, Thai PTT Global Chemical's plan to start commercial operations at its new solvents plant at Map Ta Phut has also been delayed. It will now likely start in the Q2-2016, a source close to the company earlier this month. The startup date of PTTGC's new plant has faced numerous delays from the original schedule of September 2015, to November 2015 and January 2016, and finally to Q2. The plant is part of the Phenol II project and will likely add 250,000 mt/year of phenol and 155,000 mt/year of acetone to PTTGC's existing capacity of 200,000 mt/year of phenol and 124,000 mt/year of acetone at Map Ta Phut, the source said, adding that the new plant will target sales to India and China.