Phenol Prices in China had an increasing trend in January 2024

Phenol prices in China inched higher in January 2024 amidst complex geopolitical dynamics, ensuing supply scarcity, logistical chaos, and declining inventories. According to the analysis by Procurement Resource, which depicts an m-o-m increase of 9.766% for the Chinese Benzene market, Phenol prices saw a similar upward trend in January 2024 compared to December 2023.

Rise in Phenol and Crude Oil Prices Due to Red Sea Crisis

The phenol market in China experienced a boost in price in January 2024, largely influenced by the strained geopolitical climate around the Red Sea, leading to reduced supplies amid regional unrest. Concurrently, global crude oil prices climbed sharply, exerting upward pressure on the costs of downstream derivatives such as phenol and benzene. In the United States, the main West Texas Intermediate (WTI) crude oil futures contract's settlement price recorded a 2.2% rise.

Further impacting the market, the US Energy Information Agency (EIA) reported a larger-than-anticipated increase in US refined oil inventories, suggesting potential shifts in the oil supply-demand dynamics. The oil market is anticipated to remain volatile, with supply risks tied to geopolitical factors and demand projections causing price fluctuations within a certain range.

Additionally, the EIA noted a substantial drawdown in crude oil stocks at the Cushing, Oklahoma storage hub, the NYMEX crude oil futures' delivery point, with a decrease of around 2.1 million barrels. This drawdown has had a knock-on effect on phenol pricing in China, further augmenting the upward trend in the market.

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According to Procurement Resource, phenol prices in China rose in January 2024 due to a geopolitical crisis around the Red Sea, disrupting supply and increasing crude oil costs. A 2.2% increase in WTI crude futures and a drawdown in Cushing oil stocks contributed to the trend, affecting downstream phenol market prices.