According to ChemAnalyst report, “Global Phenol Market: Plant Capacity, Production, Operating Efficiency, Process, Demand & Supply, Grade, End Use, Application, Sales Channel, Region, Competition, Trade, Customer & Price Intelligence Market Analysis, 2030”, the global Phenol market is expected to grow at a healthy CAGR of 5.5% during the forecast period on account of increase in demand for Phenol derivatives from downstream capacity expansions, particularly Bisphenol A (BPA) and Polycarbonate. More than 50 per cent of total Phenol output globally is consumed for BPA production. BPA demand is driven by strong growth in the polycarbonate market serving multitude of industries such as automobile, electrical and electronics, construction materials, medical devices among many others, globally. Asia Pacific region is likely to see around 15 planned capacity additions in Polycarbonate units by 2023. Additions in BPA capacity is also to happen in the region where China will lead in Phenol demand, followed by India.
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However, sudden outbreak of novel Coronavirus has rendered a sharp decline in Phenol demand, almost by 22 per cent globally. Phenol market outlook for the year 2020 seems bearish as several downstream companies declared force majeure which has caused a significant reduction in total Phenol offtake. As several countries adopted lockdown measures to curb the spread of coronavirus, reduced Phenol offtake from downstream manufacturers of BPA, epoxy resin, nylon and polycarbonate units by the end of first quarter has caused downshift in Phenol production as well as consumption. Phenol prices tumbled on account of slump in demand and surplus availability in Phenol producing countries like China, India, U.S., Germany, etc. Phenol demand has already taken a hit globally and piling stock of inventories in excess has further pressurized Phenol prices in the international market.
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International prices of phenol which recorded an all-time low in March have rebounded in some of the economies which have managed to limit the rate of COVD-19 infection and have started turnaround in Phenol production units. Industries in India are anticipating plant turnarounds by first week of May 2020 while those in European countries are taking longer time to recover from dampened demand and resulting plunge in Phenol prices. Europe’s phenol giant INEOS shut its manufacturing unit in Belgium for about 6-weeks starting March 2020, thereby, reducing Phenol output in the region. Other major players like Shell Global, Cepsa Corporation, Olin Corporation who had announced plant closures earlier, have resumed operations running plants at 60% operating rate to mitigate the blow of demand slowdown. While Phenol April contract prices plunged to 11 years low in Europe, Asia’s Bisphenol A (BPA) cargoes were traded at higher prices touching nearly $920/tonne CFR China, moving up by about $40-$50/tonne in April since March, due to rebounding feedstock Phenol prices in the region.
Although 2020 doesn’t seem promising for Phenol manufacturers but recovery in demand is expected as soon as the international market stabilizes and resulting pick-up in demand following growth in downstream and end user industries.
INEOS Phenol, Shell Global, Cepsa Corporation, PTTGC., AdvanSix Inc., Formosa Chemicals and Fibre Corporation., LG Chem, Mitsui Chemicals Inc., Honeywell, DOW Chemicals, Taiwan Prosperity Chemical Corp (TPCC), Sabic Innovative Plastics, Mitsubishi Chemical, Deepak Nitrite Ltd., are some of the leading players operating in the global Phenol market.
Regionally, the Phenol market has been segmented into various regions including Asia-Pacific, North America, South America, Europe, and Middle East & Africa. According to ChemAnalyst report, “Global Phenol Market: Plant Capacity, Production, Operating Efficiency, Process, Demand & Supply, Grade, End Use, Application, Sales Channel, Region, Competition, Trade, Customer & Price Intelligence Market Analysis, 2030”, Asia Pacific is expected to witness fastest growth in the overall Phenol market owing to the increase in exports of raw material and finish goods across the globe backed by huge investments which are scheduled to be on stream by 2023. Asian Phenol players are optimistic as China, the economy which accounts for the largest phenol demand, is heading towards industrial recovery after waging a long battle against coronavirus. The market optimism among Phenol players is due to a sharp spike in China’s official manufacturing PMI which touched 52 after a slip to 35.7 in February 2020. Strong surge in the demand for by-product Acetone for disinfectant manufacturing has further improved Phenol demand in APAC countries.
“Asia Pacific would augment the growth in global Phenol market during the forecast period as large downstream-derivatives capacities are stated to come on stream by 2023. Among the APAC countries, Malaysia and India are major producers of Phenol derivative BPA with China leading in Phenol demand due to growth in polycarbonate-based downstream units in the recent years. As Phenol demand is anticipated to recover post the pandemic, China will be the major country leading in overall Phenol demand which currently accounts for roughly 25% of the global Phenol demand and about 50% of the total nylon supply demand. In the next five years, China’s Polycarbonate production capacity is expected to increase at a rate of 6%, leading to higher consumption of BPA and ultimately Phenol. Moreover, since Cumene Peroxidation is the common industrial process to produce Phenol, major players are eyeing on advanced Cumene production technologies. Recently, European PKN Orlen’s announcement to use the Honeywell’s UOP Q-Max and Phenol 3G technology, to convert Orlen’s Benzene and Propylene into high-quality Cumene at low Benzene-to-Propylene ratios using regenerable catalysts is an example of early adoption of technology to gain first-mover advantage in the market. Furthermore, the key manufacturers operating in the downstream BPA markets are expanding their business through mergers and acquisitions creating lucrative opportunities for the growth of market over the next six years. These dynamics and developments in downstream industries would hugely impact Phenol demand pushing it to unprecedented levels during the forecast period” said Mr. Karan Chechi, Research Director with TechSci Research, a research based global management consulting firm promoting ChemAnalyst.
Market over-supply, plant turnarounds and disrupted supply-chains are some of the challenges lying before the dynamic Phenol industry. Hence, it becomes crucial to understand what impact these changes will have on the businesses and various stakeholders across the value-chain.
Source: ChemAnalyst
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