India Phenol Edges Up After Pre-Diwali Jump; Market Braces for Sanctions

Spot phenol prices in India inched higher after the market reopened this week following the Diwali holidays. At the same time, several market participants said they are navigating a trading landscape shaped by expanded U.S. sanctions and are bracing for additional measures.

Prices at the key western port of Kandla edged up to around 88.00 rupees per kilogram ex-tank by Wednesday, sources said, up by 0.6% from the week before Diwali, OPIS data shows. The level, the highest since mid-August, according to OPIS data, equates to an import parity value of around $903 per metric ton CFR India for product subject to the full 7.5% import duty.

Ex-tank prices firmed even though inventories were ample, with mid-October Kandla stockpiles at around 26,000 mt, a market participant said, or about 9% lower than end-September levels.

On Oct. 9, 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 for alleged violations of Iran sanctions. Among the newly designated parties were several India-based importers of petrochemicals including phenol and acetone, as OPIS previously reported.

The latest action followed a July 30 announcement by the U.S. Department of State, which also cited alleged Iran sanction violations and named two India-based importers whose portfolios include phenol and acetone.

In the wake of the Oct. 9 SDN list, distributors raised ex-tank offers, driving a 4.5% week-on-week Kandla price increase in the following week, OPIS data shows.

Several market participants said they now expect a third SDN list to be announced, possibly within weeks, and are conducting business in anticipation of further U.S. actions.

“Yes, everyone is worried about the third list,” the first market participant said.

In preparation, several regional suppliers have shortened credit terms, or the ‘grace period’ buyers have to make payment, amid concern that certain buyers could appear on the next list and be unable to settle dues.

“A trader is suddenly saying LC 30 days, when they used to offer 90 days,” said an importer, referring to a usance letter of credit, under which payment must be made 30 days after a specific event, such as the bank’s acceptance of shipping documents. Before the second SDN list, credit terms of 90 days were standard, and up to 120 days were not uncommon.

“To reduce the sanctions risk, we now offer based on advanced payment, LC at sight, or LC 30 days, depending on the customer,” said a regional supplier. “This trend is now gaining traction in the market.”

An LC at sight, where the buyer’s bank pays the seller immediately after verifying shipping documents, helps protect sellers from non-payment once proof of shipment is provided.

“The shorter payment terms are becoming a big problem for us,” another buyer said.

At the same time, as some market participants had predicted, the absence of several major buyers has created opportunities for others to expand their presence in spot phenol imports.

“Some buyers who used to buy 200-300 tons are now taking 500, even 1,000 tons,” said another regional supplier.

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. Phenol imports averaged around 20,000 mt per month in the first seven months of 2025, according to an industry source, with about 70% of the inflows coming from Southeast Asia.

For phenol co-product acetone, the Oct. 9 SDN list triggered an even sharper price rebound. Prices at Kandla rose to 64-65 rupees/kg ex-tank this week, market participants said. The increase represents a 10% jump compared with the first two weeks of October, when prices were at the lowest year to date, OPIS data shows.

Acetone inventories were at about 10,600 mt as of mid-October, the first market participant added, close to the year-to-date high of about 10,900 mt at the end of September.

In view of ample stockpiles, some remained skeptical that the price momentum would endure. Although sanctioned importers are allowed to liquidate existing inventories, not all end-users are able or willing to buy from them, others pointed out.

“End-users with a U.S. presence, or multinationals such as the big pharmaceutical manufacturers, cannot buy from those companies,” a third importer said. “The U.S.-India trade talks are ongoing, and until an agreement is signed, the possibility of further sanctions is very real.”

On Wednesday, U.S. President Donald Trump said during his keynote remarks at the APEC CEOs Luncheon in Gyeongju, South Korea that he was doing a trade deal with India.

In late August, President Trump imposed a 50% tariff on most goods imported from India, adding a 25% punitive levy to the existing 25% duty, in response to India’s continued purchase of Russian crude. Last Wednesday, the U.S. Department of the Treasury announced sanctions on Russia’s two biggest oil companies in a bid to intensify pressure on Moscow to agree to a ceasefire, after negotiations over ending the war in Ukraine stalled.

Pharmaceutical manufacturing accounts for as much as 70% of India’s acetone demand, according to market sources. The country’s acetone imports averaged close to 9,700 mt per month in the first seven months of 2025, with most shipments coming from Southeast Asia, according to the industry source.

–Reporting by Trisha Huang, thuang@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com