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The current black swan events of the COVID-19 outbreak as well
as the crude oil price war has led to energy and petrochemical
prices plunging to unprecedented levels. With multiple countries
having "lockdowns" in the battle against COVID-19, we expect
phenol/acetone demand to be hit significantly, especially in the
automotive, aerospace and construction sectors.
With supply chains globally taking a hit, such as the shutting of
port clearances and truck and train transportation between
countries, larger exporting countries such as South Korea, Thailand
and the Middle East will be forced to look for alternative markets.
In addition, the closure of companies and businesses due to country
regulations or labor shortages will inevitably lead to declining
global trade, and even more so for phenol and acetone which have
low trade volumes to begin with.
What one may expect as countries attempt to accelerate their
economic recovery, thereafter, would be a proliferation of
antidumping duty to protect domestic businesses. This will not be
helped by countries trying to boost their export volumes by
offering incentives, most recently seen in China, which raised
export tax rebates on almost 1,500 products to boost virus-hit
trade. While this ultimately may not materialize, it is a
likelihood that major producers who have low cost structures will
export as long as there are margins to be made.
Due to these events, there are interesting trade flow dynamics in
the phenol and acetone market globally. To dive deeper into the
long term market outlook, subscribe to
IHS Markit's 2020 World Analysis- Cumene/Phenol/Acetone.
Improve your strategic vision with a ten year forecast for supply,
demand, price, cost and margin. The World Analysis also includes
real time capacity database and country-to-country trade grids.
