Phenol

Phenol Market Dynamics Report – Recent Commodity Market Intelligence

I. Price Trends
- Recent Price Volatility: From June 29 to July 5, 2026, the domestic phenol market exhibited a pattern of initial strength, followed by weakness, and then stabilization. At the beginning of the week, supported by rebounds in crude oil and benzene prices, spot prices in the East China region rose from the end-of-June low of RMB 7,400/ton to over RMB 7,600/ton. In the latter part of the week, however, price gains stalled due to crude oil volatility, waning upward momentum in benzene, and sluggish downstream demand—leading the market into a weak, range-bound phase. As of July 3, the East China phenol market trading range stood at RMB 7,550–7,600/ton; the Echemnet benchmark price was reported at RMB 7,562.50/ton, reflecting a weekly increase of approximately 1.3%. In Shandong Province, mainstream delivered quotations ranged from RMB 7,800–7,900/ton—RMB 200–300/ton higher than East China levels.
- Historical Price Comparison: According to Echemnet’s 2026 price statistics, the average East China phenol price in the first half of 2026 was RMB 7,651/ton, up 6.18% year-on-year versus H1 2025. The intra-H1 price spread exceeded RMB 5,000/ton, with a peak of RMB 11,050/ton in early March and a trough of RMB 5,675/ton in early January. Current prices (RMB 7,400–7,700/ton) are approximately RMB 3,000/ton lower than the March peak, effectively erasing most of the premium driven earlier by geopolitical tensions.

II. Supply-Demand Balance
- Supply Side:
- Concentrated Maintenance Shutdowns: July marks the annual peak maintenance season for phenol–acetone (P–A) plants in China. According to Baichuan Intelligence, total external phenol supply losses attributable to maintenance in July reached 57,000 tons—representing 27.1% of monthly external supply volume—and the highest single-month maintenance loss of the year. Key facilities undergoing maintenance include Yangzhou Shiyu (320 kt/a), Shanghai GaoHua (400 kt/a), Ningbo Formosa (630 kt/a), and Huizhou Zhongxin (300 kt/a).
- Declining Operating Rates: Overall P–A plant operating rates continued declining from late June into early July. As of July 3, the national average P–A operating rate stood at 67.5%, down from 75% in mid-June. The industry-wide operating rate in June was 80.33%, down 1.1 percentage points month-on-month from May; combined with July’s concentrated maintenance, the operating rate is projected to fall further to 65%–70%.
- Limited Impact of New Capacity: Although Shandong Ruilin’s newly commissioned 350 kt/a P–A plant has begun producing qualified product and supplying the market, output ramp-up remains gradual, contributing only marginal incremental supply pressure regionally.
- Demand Side:
- Broad Downstream Weakness: Downstream demand remained subdued this week, consistent with seasonal softness. Industry-wide operating rates stayed low across the board. The bisphenol-A (BPA) sector continued suffering deep losses—average monthly losses widened to RMB 1,374/ton in June, an increase of RMB 543/ton from May; average June operating rate was 69.79%, down 1.08 percentage points month-on-month, with additional shutdowns scheduled early in July. Phenolic resin demand entered its traditional off-season in July, with operating rates at just 40%–50%. Other derivatives also showed weakness: methyl methacrylate (MMA) operating rate fell to 61.57% in June (down 5.9 percentage points MoM); isopropanol operating rate dropped sharply to 49.55% (down 17.39 percentage points MoM).
- Weak End-Use Demand: End-user sectors—including real estate, automotive, and electronics—remain generally sluggish, resulting in weakening demand transmission throughout the chemical value chain. In June, epoxy resin (E-51 grade) averaged RMB 14,648/ton, down 12.63% MoM; while polycarbonate (PC) remained profitable in June, profitability narrowed significantly on a MoM basis and operating rates declined in tandem—reflecting similarly lackluster auto and electronics consumption.

III. Cost Structure
- Benzene Prices Rebound, But Support Remains Fragile: This week, benzene prices rebounded technically following prior sharp declines. On July 3, East China benzene spot trading ranged from RMB 6,710–6,850/ton, up ~5.7% week-on-week. The rebound was driven by two factors: (i) crude oil stabilized near USD 70/bbl after the U.S.–Iran agreement announcement, slowing the downward cost trend; and (ii) expectations of tightening supply amid concentrated domestic benzene plant maintenance in July. However, overall downstream demand for benzene remains weak—benzene derivatives such as styrene, caprolactam, and adipic acid all operate at losses—limiting procurement to strict ‘as-needed’ volumes and capping benzene’s upside potential.
- Propylene Price Rally Exerts Minimal Impact: This week, Shandong propylene prices rose from RMB 6,910/ton to RMB 7,635/ton—a 10.5% weekly gain. While this provides minor cost support for P–A production, propylene accounts for only ~20% of raw material input in the P–A process, compared to ~70% for benzene—thus, its price impact is substantially weaker than benzene’s.
- Deep Industry-Wide Losses in Phenol–Acetone: Comprehensive calculations indicate that the theoretical P–A production cost this week stands at RMB 8,300–8,500/ton (based on benzene at RMB 6,800/ton and propylene at RMB 7,600/ton), markedly exceeding current spot prices—confirming persistent, deep industry-wide losses. As of July 3, the P–A production margin was -RMB 1,052/ton, widening by RMB 634/ton from -RMB 418/ton on June 26.

Analysis & Assessment
- Short-Term Market Dynamics: The phenol market is currently caught in a tug-of-war between supply-side contraction (due to maintenance) and demand-side seasonal weakness. Maintenance-induced supply tightening offers floor support to prices; yet persistently weak downstream demand limits upside potential in the near term. Though benzene prices have rebounded, their underlying support remains fragile, and the propylene rally exerts only limited influence. The P–A industry continues to operate deeply in the red.
- Widening Regional Price Differentials: The price gap between Shandong and East China remains at RMB 200–300/ton—broadened relative to May–June levels. This reflects stronger local supply contraction expectations in Shandong (due to scheduled P–A maintenance) and correspondingly firmer factory pricing discipline; meanwhile, East China prices remain more sensitive to imported cargoes and port inventories, exhibiting relatively lower price elasticity.

Outlook
- Short-Term Price Trend: In the near term, phenol prices are expected to oscillate within a narrow band, shaped by ongoing interplay between cost-driven volatility and supply-side maintenance benefits. The likely trading range is RMB 7,400–7,700/ton. Should benzene prices sustain their rebound and downstream demand show signs of improvement, modest upward movement is possible; conversely, if benzene’s rally falters and downstream demand remains lethargic, downward pressure may re-emerge.
- Medium-to-Long-Term Market Trend: Looking ahead, as July’s maintenance units gradually resume operations and new capacity achieves stable output, supply-side pressures will re-intensify. Absent meaningful downstream demand recovery, supply-demand imbalances will worsen, exerting downward pressure on prices. However, key variables warrant close monitoring: (i) benzene price trajectory—if benzene surges significantly, it would offer strong cost-based support; and (ii) BPA operating rates—if BPA utilization improves notably, it could provide substantial demand-side support for phenol.