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Following a sharp fall in crude oil prices, prices of derivatives like chemicals and solvents have also taken a hit. Benzene and phenol prices have almost halved while prices of acetone, an important solvent, have fallen 30%.
Industries that use these commodities are now incurring losses as they are being forced to sell finished products at lower prices.
For example, according to data from Platts, a global commodity information provider and top publisher of benchmark price references, Benzene was quoted at $1,356 per tonne in the beginning of August. Last week, it was being quoted at $646.
Benzene is produced from naphtha, which is made from crude oil. Phenol and acetone are produced from benzene and propylene through the cumene process.
Benzene is produced from naphtha, which is made from crude oil. Phenol and acetone are produced from benzene and propylene through the cumene process.
Phenol prices have halved from $1,620 a tonne in early August to $850 last week. Phenol has several uses, plywood makers use phenol to laminate wood with paper design. It is also used in Phenolic resins and by pesticides makers.
In India, phenol producers are cutting capacity as demand has stagnated due to volatile prices. Janak Ladhani, MD of Sonkamal Enterprises said, “Consumers are worried due to the sharp fall and are now waiting for prices to stabilise before they start buying.”
He says that importers have made losses due to the current lower prices, but adds they will have a chance to recover losses once prices stabilise.
Several plywood makers have phenol stocks bought at higher prices. They are also facing the brunt of low demand due to a slump in the housing sector.
Price of the chemical in domestic market has come down from Rs 130 a kg to Rs 82 now. One phenol producer has temporarily halted production due to low demand.
Acetone prices have come down from Rs 76 to Rs 66 per kg in India. It is used mainly by pharma firms, but for them it doesn't contribute that much to overall costs.
Even naphtha prices have fallen 46.3% and it is trading at $502 per tonne in international market. In India, prices are down 28% and it is being quoted at Rs 46,988 per tonne. Naphtha is an important feedstock for several industries.
