Additional phenol, acetone demand from Brazil, India, Turkey adds pressure on European markets

A cluster of phenol and acetone disruptions outside Europe, most notably an unplanned outage in Brazil and propylene-driven production disruptions in India, has redirected buying interest toward European sellers, reshaping trade flows, sources said in the week up to April 20.

At the same time, Turkey has emerged as a tactical outlet where bids and offers were tested against higher European prices, even as disrupted supply from other regions complicated traditional inflows and created intermittent pull for European volumes.

Latin America

Disruption of local production of phenol and acetone in Latin America has led to increased requests for material from the US and Europe.

Demand for acetone has been price-sensitive, with a distributor describing a bid heard as "unworkable."

This suggests that while Latin America was seeking replacement supply, the prices offered were not high enough to consistently divert European exports from their home markets.

However, a European producer has been able to sell phenol to Latin America at a premium to benzene of Eur200/metric ton FCA, with Europe maintaining competitiveness with the US due to lower benzene costs.

Despite this, the producer warned that this surge in Latin American demand was "unlikely to last," as it depends on how quickly local supply recovers.

For Europe, these developments could create more opportunities to export, especially if shipping and price differences improve for acetone.

Nevertheless, if bids remain too low, Europe may receive more inquiries than actual sales, limiting any immediate impact on European acetone supply.

India

India's phenol and acetone market has been disrupted by feedstock shortages affecting domestic producers.

Production at Deepak Phenolics and Hindustan Organic Chemicals halted after the government redirected LPG, a key source of propylene, which is a feedstock for phenol and acetone production, to domestic residential users.

The directive was introduced in response to LPG supply issues caused by the war in Iran and the closure of the Strait of Hormuz.

Indian producer Deepak Phenolics resumed operations on April 15 after securing propylene from a domestic refiner, but is expected to run at low rates due to limited supply, market sources said. Hindustan Organic Chemicals has also restarted production at its phenol acetone plant on April 20 after remaining shut for over a month due to propylene shortages.

These developments have increased India's need for imports, including from Europe.

However, price disagreements have prevented deals, as distributors and a producer have described offers for European phenol to India as too low at $1,550-$1,600/mt CFR.

Conversely, a second producer said it was "possible to do business with India," albeit at lower prices due to competition from China, with a premium to benzene heard in the range of Eur100-150/mt FOB.

For European suppliers, reduced Indian production could tighten availability if prices become workable, but low prices and resumed production may keep volumes within Europe or redirect them elsewhere, limiting the immediate impact on European balances.

Other distributors also said that they are unwilling to export to India due to logistical constraints.

Turkey

Turkey is increasingly discussed in the market through bids and offers circulated by distributors and producers, reflecting both opportunistic and structural drivers. Recently, a bid was heard at Eur1,500/mt CFR.

Some participants who bought at lower pre-war prices may now be seeking to capitalize on higher European prices, while supply constraints in other regions are disrupting normal flows into Turkey, forcing Turkish buyers back toward European supply despite higher replacement costs.

US constraints

Multiple US-based sources said production disruptions across the Americas, beginning with a winter freeze and followed by a series of planned and unplanned outages, have tightened acetone supply and triggered what one supplier described as "panic buying" from customers in Europe and Latin America.

However, high freight rates are making exports prohibitively expensive, limiting the US's ability to fill all the gap left by the Latin American and other regional supply constraints, according to sources.

One supplier said some competitors were "not performing to their 100%" and that operating rates across the sector remained depressed. "It takes a long time for phenol derivatives to get along," the supplier said, adding that phenol shipments face additional logistical challenges because containers must be heated during transport.

"Phenol and acetone quotes are rising for Brazil, Colombia and Mexico. Prices have moved up from 30 to 40 to 50, now 60-70 cents/lb, and acetone is too short at the moment. Some producers are sold out," the supplier said.

Platts, part of S&P Global Energy, assessed spot acetone prices at $1,547/mt FOB US Gulf on April 14, up $114/mt week over week, within pricing indications heard at low to mid-70s cents/pound ($1,543-$1,653/mt). Domestic acetone was assessed at $1,786/mt DAP East of the Rockies, up $111/mt week over week.

Platts assessed domestic term phenol at $1,423/mt ex-tank East of the Rockies on April 14, up $22/mt week over week, and spot phenol at $1,401/mt FOB US Gulf Coast, up $114/mt.

Platts assessed the FD NWE acetone spot price at Eur1,700/mt, unchanged week over week, and the phenol outright price at Eur1,258/mt FD NWE, down Eur59 week over week amid lower benzene values and a stronger euro against the US dollar.