Major events in the phenol market in 2015

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1. In March and April, three major phenol production facilities were put into operation in the East China region. The details are as follows: Location, Company Name, Phenol Production Capacity (10,000 tons/year): Shanghai, Shanghai Xisa Chemical – 40; Shanghai, Sinopec Mitsui – 40; Zhejiang, Taihua (Ningbo) Chemical – 48. This year, the total phenol production capacity in the East China region will reach 1.28 million tons/year, with an additional 800,000 tons/year of production capacity for phenol alone. Taihua (Ningbo) has a downstream bisphenol A production facility with a capacity of 150,000 tons/year. Shanghai Xisa Chemical supplies bisphenol A to Bayer, while Sinopec Mitsui supplies it to Mitsui’s bisphenol A production facilities. In 2015, new bisphenol A production capacities were added: 120,000 tons for Huayi, 30,000 tons for Mitsubishi, and 60,000 tons for Nantong Xingchen. The increase in phenol consumption was less than the increase in production capacity, resulting in a clear trend of capacity reduction. 2. Phenol producers suffer losses while profits are low; industry profits are under pressure. The plants scheduled to go into operation in the first quarter delayed their commencement of operations, which led to a significant rise in domestic phenol prices. As companies’ profit levels improved, new plants began producing products and selling them on the market starting from mid-April. Additionally, a phenol production plant in the United States stopped operating in April and sold its inventory at low prices. Combined with an oversupply in the domestic market and low prices in foreign markets, phenol prices started to fall from April onward. From June to November, domestic phenol prices remained within a certain range. Manufacturers joined forces on several occasions due to losses, but the efforts to maintain stable prices failed to last long owing to conflicting interests among them. In the second half of this year, high inventory levels at Bingtong Port have become the norm, and amid these high-inventory risks, Bingtong’s stock price has tended to decline. In 2015, the domestic phenol market was primarily driven by the consumption of newly added production capacity, while in the case of propylene, it was a competition between domestic and imported supplies. 3. Relaxation of anti-dumping policies results in little impact from foreign dollars The policy of eliminating anti-dumping taxes on phenol imports from Japan, South Korea, the United States, and Taiwan, China was implemented in 2015; however, aside from April this year, foreign dollars have had little effect on the domestic phenol market. 　　As the price gap between domestic and international markets widened, the pattern of phenol imports changed, shifting gradually from traditional general trade to processing under feed-in arrangements and goods moving in and out of free zones, with a relatively minor impact on the domestic market. (Statistics for January–October 2015 are incomplete.) The expansion of phenol production facilities in China has intensified, resulting in a smaller proportion of imported goods. Import volumes of phenol from Europe and Southeast Asia have decreased significantly this year, as phenol production facilities in the United States were shut down. Increased imports of phenol into the U.S. during March and April led to an increase in the share of phenol coming from that country. The majority of phenol imports are sourced from Japan, South Korea, and Taiwan, with trade arrangements mainly involving processing under contract and duty-free goods. Domestic imports are concentrated in certain areas, primarily Jiangyin, the Zhangjiagang Free Trade Zone, and Jinshan County in Shanghai.