Introduction: On May 11, the phenol market halted its decline and rebounded, though the pace of increase was relatively slow. However, on May 18, the trend changed abruptly as slower pickup of phenol in Shandong led local producers to raise quotations first. This lead-up move improved supplier sentiment, and the East China market surged by over 300 yuan/ton on the same day. But due to caution among end-users in chasing higher prices, the uptrend did not sustain; a narrow pullback occurred the next day, and trading volumes remained low. Over the following two days, the decline accelerated, with prices gradually moving back toward pre-rally levels.

Shandong supply pressure was manageable as the driver of the rally, but poor transmission of high prices led to a retreat in gains

Within just a few working days, the domestic phenol market experienced alternating gains and losses. The price increase on the first working day of the week exceeded expectations, which made end-users cautious about chasing higher prices. As buying interest slowed, suppliers, considering their contract fulfillment progress, began offering discounts to move goods, shifting the market focus downward.

Comparison of domestic phenol market price changes for this week (unit: yuan/ton)

| Region/Category | May 15 | May 18 | Change | May 21 | Change | % Change |
|-----------------|--------|--------|--------|--------|--------|----------|
| East China | 7780 | 8100 | +320 | 7825 | -275 | -3.40% |
| North China | 7875 | 8200 | +325 | 8100 | -100 | -1.22% |
| South China | 8050 | 8300 | +250 | 8150 | -150 | -1.81% |
| Shandong | 7900 | 8200 | +300 | 8100 | -100 | -1.22% |
| Data source: chempricehub information | | | | | | |

Comparing the prices from May 15 to May 18, the increases were notable. During this period, slow phenol pickups at Shandong plants supported local factories in raising quotations and leading the market. However, due to contract shipment progress and poor transmission of high phenol prices to downstream end-users, some bargain negotiations emerged. End-user buying turned cautious, and daily declines grew from small to large. Over three trading days, the cumulative decline left only a 45 yuan/ton difference from the earlier rally.

Analysis of phenol trend based on cost, average price, and supply-demand dynamics

1. From a supply perspective: Jilin Petrochemical’s bisphenol A product has been successfully produced, reducing phenol external sales, which supports the northern market to some extent. Next week, although Wanhua Chemical and Moyiwei Chemical (Shanghai) phenol-ketone units are expected to restart, the impact on spot supply is likely limited. On the import-export front, imports exceed exports, but given the longer storage cycle at ports and diverse sales channels, the impact on spot supply is limited.

2. From a cost perspective: As of now, phenol prices are still inverted relative to benzene by 400-500 yuan/ton, which is an abnormal situation. It is expected that the price gap between the two will have limited room for further widening; otherwise, the profit loss for phenol-ketone enterprises would deepen.

3. From the monthly average price perspective: Based on the closing prices of the East China market from chempricehub information, the average price so far in May is slightly below 8,000 yuan/ton. The current market price is around 7,800 yuan/ton, which, even considering discounts, is still below the average level. From this perspective, downward price space is expected to be controllable.

4. From the demand perspective: Next week, attention should be paid to the restart timing of bisphenol A units at Covestro, Wanhua Chemical, and Cangzhou Dahua. Although the incremental phenol demand is not large, there may be an expectation of demand improvement. Other downstream sectors are expected to participate mainly based on just-in-time needs.

Conclusion

Based on the above analysis, considering cost, average price, and supply-demand factors, it is expected that the number of operators offering discounts in the short-term domestic phenol market will decrease, potentially shifting to narrow-range fluctuations. Attention should be paid to the balance between supply and demand, with opportunities for testing higher offers. However, conditions for a rapid price increase are not yet present; a steady and gradual approach may be more conducive to long-term development. It is worth noting that the current market remains in an inverted situation, so factory pricing dynamics require close monitoring. Caution is advised in operation.