The bulk prices for Phenol, ex- Kandla, have declined significantly this week on account of appreciation of the Rupee due to imminent formation of strong governance in India. Also, it’s important to note that the Indian government has imposed Anti Dumping Duty (ADD) on Phenol imports from Taiwan, which is one of the main exporting counties to India. This review takes a snapshot of the recent price fluctuations for the chemical in the Indian market and captures market dynamics within the country.
Currently, the bulk price of Phenol, Ex- Kandla, is at around Rs. 99 per kg (exclusive of all taxes). Last time the price dropped to this level was during the financial year end closing, between the last week of March and the first week of April, 2014, according to the price database available with Indianpetrochem.
The price in the first week of May, 2014 peaked to trading levels of Rs. 105-106 per kg. However, within last week the price have declined to levels of Rs. 103 per kg and settled at current trading range of Rs. 99 per kg. The website draws from various market sources that the primary reason for the price decline is due to the appreciation of the Rupee, which has rallied by around 7% over a short time span.
Various traders cite slow demand for Phenol in the Indian market context, one trader added, "Phenolic Resins are one of the main end user segments for Phenol. Usually the demand from this end user segment remains consistent, however, off late buyers of this segment who usually purchase around 120 tonne a week have curtailed their purchases to 55 -58 tonne a week, adopting a need based procurement strategy on expectation that the prices might decline further on grounds of exchange rate fluctuations.”
From an industry source, it is understood that 20,000 metric tonne of import shipment of Phenol has arrived at the Kandla port this month at a booking price range of $ 1,500-1,545 metric tonne (average price of $1,525 per metric tonne), these shipments were booked at an exchange rate of Rs.62.50 to a Dollar. Hence, the current downfall in prices is due to a combination of weak Dollar and slow off takes for the chemical.
On 16th May 2014, the Indian Government imposed a levy of $79.63 per metric tonne for Taiwanese import shipment from Formosa Chemical and Fiber Corporation and a duty of $46.07 per metric tonne for Taiwanese import shipment from Taiwan Prosperity Chemical Corporation. Also, it’s important to add that the government has already levied ADD of $ 146.09 per tonne on import of Phenol from the U.S on 11th March, 2014.
In the past it has been observed that imposition of ADDs have severely altered the trade dynamics of Phenol imports into India. In 2012, US (57%) had the largest market share for Phenol imports into India, followed by Taiwan (20%), South Africa (8%), South Korea (6%) and Thailand (5.6%), according to data gathered by ICIS presented at Asian Petrochemical Industry Conference (APIC), 2014. However, with the imposition of ADD on US import these statistics have severely been altered in 2013, to descending market share of Taiwan (29%), United Stated (23%), South Korea (17%), Thailand (10%), South Africa (9%) and Singapore by (6%), according to data gathered by ICIS presented at APIC, 2014.
As such, it’s expected that the imposition of this ADD will severely impact the import coming in from Taiwan, paving way for another country to dominate imports into the Indian market. An industry official from HOCL speculates that in the near term imports from South Korea will dominate the market. In this respect, the company has already in process of filling ADD for imports from South Korea.
The demand for phenol typically slows down in the month of April, May and June in India. However, phenol demand gains momentum thereafter from most of the end-user sectors. In the short run, there is an expectation that the prices will primarily move on account of the exchange rate fluctuation, however in the long-run, with the imposition of present ADD on imports and gaining demand momentum, the price should most likely move upward in the future.
(This article was published on the website on May 20, 2014)
Currently, the bulk price of Phenol, Ex- Kandla, is at around Rs. 99 per kg (exclusive of all taxes). Last time the price dropped to this level was during the financial year end closing, between the last week of March and the first week of April, 2014, according to the price database available with Indianpetrochem.
The price in the first week of May, 2014 peaked to trading levels of Rs. 105-106 per kg. However, within last week the price have declined to levels of Rs. 103 per kg and settled at current trading range of Rs. 99 per kg. The website draws from various market sources that the primary reason for the price decline is due to the appreciation of the Rupee, which has rallied by around 7% over a short time span.
Various traders cite slow demand for Phenol in the Indian market context, one trader added, "Phenolic Resins are one of the main end user segments for Phenol. Usually the demand from this end user segment remains consistent, however, off late buyers of this segment who usually purchase around 120 tonne a week have curtailed their purchases to 55 -58 tonne a week, adopting a need based procurement strategy on expectation that the prices might decline further on grounds of exchange rate fluctuations.”
From an industry source, it is understood that 20,000 metric tonne of import shipment of Phenol has arrived at the Kandla port this month at a booking price range of $ 1,500-1,545 metric tonne (average price of $1,525 per metric tonne), these shipments were booked at an exchange rate of Rs.62.50 to a Dollar. Hence, the current downfall in prices is due to a combination of weak Dollar and slow off takes for the chemical.
On 16th May 2014, the Indian Government imposed a levy of $79.63 per metric tonne for Taiwanese import shipment from Formosa Chemical and Fiber Corporation and a duty of $46.07 per metric tonne for Taiwanese import shipment from Taiwan Prosperity Chemical Corporation. Also, it’s important to add that the government has already levied ADD of $ 146.09 per tonne on import of Phenol from the U.S on 11th March, 2014.
In the past it has been observed that imposition of ADDs have severely altered the trade dynamics of Phenol imports into India. In 2012, US (57%) had the largest market share for Phenol imports into India, followed by Taiwan (20%), South Africa (8%), South Korea (6%) and Thailand (5.6%), according to data gathered by ICIS presented at Asian Petrochemical Industry Conference (APIC), 2014. However, with the imposition of ADD on US import these statistics have severely been altered in 2013, to descending market share of Taiwan (29%), United Stated (23%), South Korea (17%), Thailand (10%), South Africa (9%) and Singapore by (6%), according to data gathered by ICIS presented at APIC, 2014.
As such, it’s expected that the imposition of this ADD will severely impact the import coming in from Taiwan, paving way for another country to dominate imports into the Indian market. An industry official from HOCL speculates that in the near term imports from South Korea will dominate the market. In this respect, the company has already in process of filling ADD for imports from South Korea.
The demand for phenol typically slows down in the month of April, May and June in India. However, phenol demand gains momentum thereafter from most of the end-user sectors. In the short run, there is an expectation that the prices will primarily move on account of the exchange rate fluctuation, however in the long-run, with the imposition of present ADD on imports and gaining demand momentum, the price should most likely move upward in the future.
(This article was published on the website on May 20, 2014)
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