India’s Local Phenol Prices Hit Nine-Week High Amid Expanding US Sanctions
Domestic spot phenol prices in India climbed to a nine-week high following the expansion of U.S. sanctions targeting India-based entities allegedly engaged in the purchase and sale of Iran-origin petroleum and petrochemical products, market participants said on Tuesday.
Spot phenol prices at the key western port of Kandla rose to around 87.00-87.50 rupees per kilogram ex-tank, sources said, up by 4.2% from the assessment week ended Oct. 9, OPIS data shows. The level is equivalent to an import parity value of around $890 per metric ton CFR India for product subject to the full 7.5% import duty, or $40-$45/mt higher than last week’s OPIS assessment of $845-$850/mt CFR India on the same duty basis.
Kandla prices rose amid expectations of short-term supply disruptions and the potential for a reshuffling of market participants. Prices were last higher in mid-August, according to OPIS data, after the unplanned shutdown at the country’s largest domestic phenol plant in early August drove an 8% week-on-week spike.
On Thursday, the U.S. Department of the Treasury’s Office of Foreign Assets Control expanded its list of Specially Designated Nationals, targeting buyers, shippers, terminal operators and vessels spanning multiple jurisdictions from Asia to the Middle East. Among the newly designated parties are several India-based importers of petrochemicals including phenol and acetone, as OPIS previously reported. This latest action follows a similar announcement by the U.S. Department of State on July 30, which also cited alleged violations of Iran sanctions and named two India-based importers whose portfolios include phenol and acetone.
The immediate aftermath has been disruptive as market participants suspended business dealings with the sanctioned entities. According to a market source, some cargoes that arrived at Kandla at the end of last week had to be promptly resold to non-sanctioned entities after the vessel owner refused to discharge the cargoes into shore tanks leased by the newly designated entities.
Suspended business activities also mean that a large volume of funds have been frozen, leaving customers unable to take delivery of cargoes or secure refunds from the sanctioned importers, a situation that may take up to two months to resolve, another source added.
However, some market participants viewed the departure of several major players as a potentially positive development for the CFR India phenol market.
“These four, five firms have dominated the phenol and wider petrochemical import business for the past two, three years, pushing smaller importers to the sidelines. Their absence will open up opportunities for compliant importers to enter the business,” said an India-based market participant. “The phenol import business will become more decentralized and we could see some healthy competition return to the market.”
At the same time, India market participants are proceeding with heightened caution, on concern that the OFAC’s SDN list could be further expanded, and as multinationals avoid doing business with the companies already named. Some had seen the initial U.S. Department of State announcement in late July as a signal that broader curbs were on the horizon.
“It could become a situation where every importer will have to be vetted by suppliers,” the first source said.
While the initial price action was positive, some market participants expressed skepticism that the price momentum would last, citing the timing of the latest SDN list. The expected seasonal pick-up in pre-Diwali festival demand is all but over, and prices could come under downward pressure when the sanctioned importers begin liquidating their existing inventories.
One of the importers “is sitting on a lot of inventories of various petrochemical products and there will be pressure on prices when it starts to liquidate cargoes,” the second source said. “It’s best to wait and watch how things develop from here.”
With a domestic nameplate production capacity of 372,000 mt/year, India remains a net importer of phenol, serving as a key outlet for regional producers grappling with rising supply and subdued demand. The country’s phenol imports have averaged about 20,000 mt per month in the first seven months of 2025, according to an industry source, with the bulk of the volumes originating from Southeast Asia.
The widely anticipated festive demand failed to materialize this year, according to some. Typically, demand from the key downstream plywood and laminates sector improves after the end of the annual monsoon in September, as households repaint and refurbish ahead of Diwali, which falls on Monday this year. For three of the past four years, the festival occurred in November, in line with the Hindu lunar calendar. Demand in the fourth quarter is typically subdued, the second source added.
“There is also the worry that if CFR India prices rise to $900/mt, the floodgate will open for imports,” the third source said.
Adding to the uncertain market outlook is the potential return of U.S. phenol exports, which also typically occurs in the fourth quarter as American producers liquidate year-end inventories, some pointed out. Inflows from the U.S. have totaled about 6,700 mt in the first seven months of 2025, according to the industry source.
–Reporting by Trisha Huang, thuang@opis.com; Editing by Mei-Hwen Wong, mwong@opis.com