Supply-demand dynamics outweigh cost factors, resulting in weak price trends for phenol with no clear pattern of fluctuations.

【Introduction】: In early July, the phenol market steadily crossed the 8,000 RMB/ton threshold, with prices subsequently fluctuating mostly between 8,000 and 8,300 RMB/ton. During this period, a mix of factors—including slightly sluggish upward momentum, a temporary price inversion with pure benzene, strengthening of the by-product acetone, bearish downstream buying interest, and tightening spot supply in mainstream markets at the end of the month—created a pattern of alternating gains and losses. In the short term, costs and supply-demand dynamics will continue to alternately serve as the dominant factors determining price direction at specific stages.

I. Weakened Correlation Between Phenol and Pure Benzene: Analysis of Price Convergence Differences

On July 6, the price spread between East China phenol and acetone reached a high of 3,050 RMB/ton, solidifying phenol’s position as the main product. During the same period, the spread between phenol and pure benzene was 815 RMB/ton. Subsequently, under the influence of the external environment and cost factors, the acetone market saw a notable rally with gains exceeding 1,000 RMB/ton. The phenol market, constrained by weak demand, had limited upward movement, leading to a short period in late July where phenol prices fell below those of pure benzene. The price spread between phenol and acetone also narrowed to around 2,000 RMB/ton.

In July, the profit losses for phenol-ketone petrochemical enterprises showed little improvement, with losses widening in the latter half of the month. During this period, the price spread between phenol and pure benzene narrowed and even inverted. Although acetone prices strengthened, they did not keep pace with the increase in the dual raw materials. On July 27, a reversal occurred: the prices of the dual raw materials dropped sharply due to the decline in crude oil prices, while the phenol market was relatively resilient, supported by tight spot supply. Acetone market buying interest waned, entering a downward channel, but its decline was smaller than that of the raw materials, allowing phenol-ketone enterprises to repair their margins.

II. Supply Takes Over Demand as the Leading Factor: From Weak Upward Momentum to Relative Resilience

In early July, the dual raw materials rose sharply driven by the uptrend in crude oil. Although phenol jumped from the 7,000s to the 8,000s, its rally was clearly weaker than that of the dual raw materials and the related product acetone. This led to a recurrence of the price inversion between phenol and pure benzene in late July. The main constraint during this period came from downstream demand, with insufficient follow-through from end-user purchases and significant resistance for suppliers to move goods, making it difficult to realize the positive cost-side price increases and limiting the upward potential of the phenol market.

A reversal occurred near the end of the month: the dual raw materials dropped sharply under the influence of falling crude oil prices, while the phenol market saw tightening spot supply, which gave it some resilience during this period, resulting in the smallest decline within the industrial chain.

III. Comprehensive Consideration of Costs, Supply, and Demand: Outlook for Short-Term Phenol Price Trends

Table 1 Summary of Recent Domestic Phenol-Ketone Plant Maintenance (Unit: 10,000 tons/year)

At the end of July, attention should be paid to the restart timelines of the Longjiang Chemical and Changchun Chemical phenol-ketone units. In early August, the maintenance progress of Wanhua Chemical's phenol-ketone unit needs to be tracked. Overall industry operating rates are expected to increase, and some domestic plants will have higher contract supply volumes compared to July.

In terms of imports and exports, imports are mainly for ocean replenishment, and export negotiations need to be monitored. Port inventory impact is limited, but the influence of domestic barge cargoes should be a key focus.

On the demand side, phenolic resins are still in the high-temperature off-season in August. The demand increase for bisphenol A is roughly in sync with the supply increase of phenol, so overall procurement follow-through is moderate, and essential demand will likely remain the main theme.

In summary, although the correlation between cost price fluctuations and phenol has weakened recently, a certain degree of correlation will still exist in the long term. Therefore, it is necessary to monitor the magnitude of changes in pure benzene prices and comprehensively assess market trends by integrating supply and demand. Most of the phenol-ketone units restarting or shutting down in August are paired with bisphenol A operations, so the impact of supply increases on spot market will not be abrupt and there will be a buffer period. Considering that end-user demand remains key, under the rhythm of essential demand procurement, periodic variables may lead to market reversals. The tight spot supply at the end of the month may still provide support. The external environment still needs attention as it directly affects raw material prices. At the beginning of the month, suppliers have little pressure to sell. If costs stabilize, the phenol market may still have defensive factors; if costs have further room to decline, then end-user buying sentiment needs to be monitored, and phenol market prices may show signs of loosening. Cautious operations are recommended.