Since December, China’s phenol market has accelerated its downward trend and is now fluctuating at low levels

December 19th, news

Since December, the Chinese phenol market has experienced a significant decline followed by a period of low-level fluctuation. Sinopec's listed price in East China is 5850 CNY/ton. According to monitored data, from the perspective of the East China market, the price of phenol in East China was 6225 CNY/ton on December 1st and 5850 CNY/ton on December 19th, representing a price decrease of 6.02%.

From the supply perspective, the operating rate of Chinese phenol enterprises in this period has remained stable at around 75%, with no significant fluctuations. A stable capacity utilization rate means that the market supply base is relatively fixed, with no sudden reductions or increases, which is one of the important reasons for the current narrow price fluctuations and the absence of extreme movements. In December, the total volume of phenol shipments to East China reached 49,700 tons, of which 27,500 tons have already arrived, and 22,200 tons are in transit. The current domestic shipment replenishment is not large, with port inventory stable at 8,500 tons, and the pressure on spot supply is not high, providing a certain basis for suppliers to maintain prices; however, the arrival pace of subsequent shipments in transit will directly affect inventory changes, and it is necessary to continuously monitor the potential impact of shipping dynamics on the supply side.

From the demand side, downstream end-user enterprises have limited participation in market inquiries. The main reason for the current market downturn is also the difficulty in releasing demand. The expectation of breaking the level of 60,000 CNY per ton has been released in advance. Factories have significantly reduced their listed prices, continuously setting new lows for the year. Currently, the market is affected by low prices, with insufficient transactions, and the focus continues to decline.

As of December 19, the phenol quotations in major markets across China are as follows:

Region | December 19 Quote | ---|---|--- East China Region | 5780 | -320 Shandong Region | 5850 | -400 Yanshan Surrounding Areas | 5850 | -350 South China Region | 5900 | -350

It is expected that, by late December, the Chinese phenol market will remain in a consolidation phase, with price fluctuations likely to continue within a narrow range and trading volumes unlikely to see any significant increase.

There is potential for a slight increase in supply: On the one hand, Yangzhou Shiyou’s phenol-ketone unit has plans to restart; if the restart proceeds smoothly, it will boost market supply. On the other hand, replenishment of cargoes via near-ocean and domestic shipping routes will continue. However, considering the support from monthly average price levels and the progress of supply-side contract shipments, overall willingness to offer discounts remains relatively weak, meaning that the price pressure resulting from the increased supply may be partially offset.

The demand side lacks upward momentum: Demand for the core downstream product, bisphenol A, is expected to decline slightly, and other downstream industries continue to adopt a “cautious, necessity-driven” purchasing approach, showing insufficient willingness to proactively stock up on phenol. The continued weakness in terminal demand will continue to constrain the room for price increases, making it difficult to generate effective upward momentum.

Recently, the impact of raw material price fluctuations on the phenol market has been relatively weak, making it difficult for cost factors to become the dominant force driving market trends. In the next period, the core contradiction in the market will continue to center on supply and demand: the interplay between increasing supply and weak demand will determine the overall direction of price movements.