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Changes in Phenol and Acetone Demand

09 April 2020

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.

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