The US October phenol contract settled at a drop of 9.23 cents/lb ($203/tonne, €142/tonne) at 73.08–77.53 cents/lb FRT EQ (freight equalised), as assessed by ICIS.
The drop was based mostly on the 68 cent/gal fall in feedstock October benzene, as most US phenol contracts are tied to benzene.
Most freely negotiated contracts also fell by 9.23 cents/lb, flat with benzene-based formula contracts.
That formula-based and freely negotiated contracts settled flat with each other shows that the US phenol market has softened, as freely negotiated contracts were settling at a premium to formula-based contracts during the summer.
The biggest reason for the softness in the US phenol market has been slower demand from most markets, as downstream buyers are looking to destock inventory ahead of end-of-the-year taxes.
Sources said they also have not seen the typical winter holiday buildup and boost in demand, especially from Asia.
Several US producers said they have started to adjust their operating rates to account for the softer domestic and export demand.
With producers running full-out for much of 2011, supply is also slightly longer than normal, sources said.
Most phenol buyers said they have seen some offers for spot material but have expressed no interest, as their contract volumes are filling their needs.
Major US phenol producers include Dow Phenol, Georgia Gulf, Honeywell, INEOS Phenol, SABIC Innovative Plastics and Shell Chemical.
($1 = €0.73)
