In early September, the phenol market was lifted by rising prices of both feedstocks and by list-price increases announced by producers in northern China, pushing the market price center higher on a fluctuating basis. However, because end users showed little buying interest and mostly stayed on the sidelines consuming existing inventories, replenishment for rigid demand was insufficient, and the upward momentum stalled. As a result, the negative spread between phenol and benzene widened while the gap with acetone narrowed, and profit losses for phenol/acetone producers kept changing. As of now, phenol is 650 yuan/mt below benzene, acetone has also entered the above-8,000-yuan/mt bracket, and the phenol market is once again showing a price-hiking stance.
I. Price/Spread Comparison of Phenol with Benzene and Acetone
Table: Comparison of phenol, benzene and acetone price spreads in East China (unit: yuan/mt)
| Item | Aug 3 | Sep 9 | Change | Change % |
|---|---|---|---|---|
| East China phenol | 8650 | 8675 | 25 | 0.29% |
| East China benzene | 7500 | 9440 | 1940 | 25.87% |
| East China phenol–benzene spread | 1150 | -765 | -1915 | -166.52% |
| East China acetone | 6250 | 8525 | 2275 | 36.40% |
| East China phenol–acetone spread | 2400 | 150 | -2250 | -93.75% |
| Data source: Chempricehub Information |
As of September 9, the East China phenol market price was 8,675 yuan/mt, only 25 yuan/mt higher than in early August, representing a fairly narrow price movement. This contrasted sharply with feedstock benzene and co-product acetone, which rose by 1,940 yuan/mt and 2,275 yuan/mt respectively over the period. Taking co-production output ratios into account, although acetone played some role in profit recovery, product price increases still fell short of cost increases, and with phenol's muted trend, the loss range changed considerably.
On September 9, the East China phenol–benzene spread was inverted at -765 yuan/mt, while mainstream acetone prices climbed to 8,525 yuan/mt and the phenol–acetone spread narrowed to 150 yuan/mt. Although phenol demand-side performance was lackluster, phenol prices remained at relatively low levels versus related products, which encouraged sellers to quote higher. Inquiries followed up accordingly, and the market's upward move strengthened.
II. Phenol–Acetone Spread Below 200 yuan/mt Keeps Phenol/Acetone Producer Losses Volatile
Since the beginning of September, phenol/acetone petrochemical producers have posted losses in the 700–1,200 yuan/mt range. Benzene and propylene both rose sharply, and acetone performed relatively strongly, but phenol showed little response—this has been the main obstacle to recovering phenol/acetone margins. Over the same period, co-product acetone strengthened. As of September 9, Sinopec's East China phenol price stood at 8,700 yuan/mt and its acetone price at 8,500 yuan/mt; with the spread between the two narrowing and acetone relatively firm, the ongoing rise in costs was to some extent offset, preventing phenol/acetone producers' losses from expanding too much.
In summary, feedstock costs are currently at high levels, providing support for phenol price increases. Although end-user demand is slow to follow, cautious buy-on-strength activity will accompany the price push. As phenol and acetone prices grow increasingly close, and given that acetone has historically risen more than phenol, price parity between the two products is possible. Acetone trading above phenol has occurred before; whether that scenario recurs this time will depend on the extent of phenol market gains and changes in phenol/acetone producer profitability, with acetone needing to act as the balancing factor. Based on the above analysis, the domestic phenol market is expected to maintain a firm tone in the short term. The inverted spread against benzene will likely narrow only gradually, phenol may trade close to or below acetone, and phenol/acetone producers' losses will keep fluctuating between deepening and improving.
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