Introduction: After more than two months, the inverted price relationship between phenol and pure benzene has finally changed. On November 3, the price spread turned positive, returning to the normal upstream-downstream pricing logic of the industrial chain. Meanwhile, the losses incurred by phenol/acetone producers have significantly narrowed, with profits now hovering around the break-even level. Currently, costs and phenol/acetone prices remain in a period of fluctuation. The weakening cost trend has increased wait-and-see attitudes among end-users, undermining the bullish support from tight spot supply. With both upstream and downstream sectors weakening simultaneously, the monthly average price floor for the phenol market remains intact, suggesting that its downward pace may still be slower than that of pure benzene.
Since late August, phenol and pure benzene prices had been in an inverted state, with the maximum inversion reaching 2,450 yuan/ton, while fluctuations during other periods typically hovered around 1,000 yuan/ton. This inversion lasted for approximately two months. In early November, raw material pure benzene prices fell sharply due to constraints such as weak crude oil prices, easing supply conditions, and poor transmission of high prices to end-users. The phenol market experienced tight spot supply due to delays in domestic vessel arrivals and shipment restrictions at certain plants. Although holders maintained a firm pricing stance amid this supportive factor, the weakening cost side increased wait-and-see attitudes among downstream end-users, slowing procurement pace and lowering bid intentions. Suppliers faced difficulties in offloading inventory and offered cautious discounts, leading to a pullback from high levels. Since phenol declined at a relatively moderate pace compared to pure benzene, the price spread was repaired during this phase, shifting from inversion to a positive spread. Consequently, profits for phenol/acetone producers recovered to fluctuate near the break-even line.
Table 1: Summary of Recent Maintenance Activities for Domestic Phenol/Acetone Units (Unit: 10,000 tons/year)
| Enterprise Name | Capacity | Start Date | End Date | Duration (Days) |
|---|---|---|---|---|
| CNOOC Shell | 22 | 2023/7/1 | -- | -- |
| Huizhou Zhongxin (Phase I) | 18 | 2026/4/11 | -- | -- |
| Fuyu Petrochemical | 15 | 2026/10/20 | 2026/11/19 | 31 |
| Lihua Yiwei Yuan (Phase II) | 22 | 2026/10/24 | -- | -- |
As of now, apart from two units undergoing long-term shutdowns, the main shutdown enterprises are concentrated in Shandong Province. In late October, the decline in operating rates among phenol/acetone producers in the Shandong region served as a catalyst that provided strong support to the phenol market, narrowing the loss margin for these producers. In early November, as pure benzene prices fell sharply, phenol prices declined more slowly due to tight supply support, resulting in significant profit recovery for phenol/acetone producers.
Early this week afternoon, shipping dynamics indicated that 6,000 tons of cargo were loaded out from the West China warehouse area. Inventory at Jiangyin Port is expected to drop below 10,000 tons. Short-term replenishment will primarily rely on domestic vessels. Considering the reduction in monthly contract volumes, Jiangyin Port inventory is expected to remain low in the short term. Future developments should focus on the arrival of imported contract cargoes.
In early November, prices for both key raw materials weakened, with pure benzene experiencing a larger decline. Affected by this, downstream end-user enterprises slowed their entry into the market for procurement, bidding cautiously and continuously testing lower prices. Although holders did not face significant pressure to sell, factors such as a weak overall environment, increased resistance to sales, and competitive pricing led them to offer discounts. Market sentiment turned bearish, and trading activity lacked sufficient follow-through.
In the short term, prices for both raw materials are expected to remain weak. Under the bearish constraint from the cost side, end-user purchases of phenol are expected to remain limited to essential demand. The discount space for holders needs to be evaluated comprehensively based on contract progress, monthly average price levels, and spot supply conditions. The phenol market is expected to advance with a weak posture in the short cycle, while longer-term forecasts require continued monitoring of cost and supply-demand variables.
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