In the Fourth Quarter, China's Phenol Market Declined Significantly, Reaching a Five-Year Low

December 26, news

In the fourth quarter of 2025, the Chinese phenol market showed a significant downward trend, with prices continuously falling from the high point at the beginning of the quarter, reaching the lowest levels of the year and even the past five years. The industry is facing dual challenges of supply-demand imbalance and profit pressure. This market decline is the result of multiple negative factors, including mismatched supply and demand, weakened cost support, and industrial chain transmission, which have had a noticeable impact on the phenol market and its upstream and downstream industries. According to monitored data, in the East China market, the price of phenol in China was 6,912 CNY/ton on October 1st and 5,845 CNY/ton on December 26th, a decrease of 15.44%.

Compared to the previous year, the average annual price of phenol in 2025 was 6,850 CNY/ton, a decrease of 1,064 CNY/ton from 7,914 CNY/ton in 2024, with a price decrease of 13.44%. The significant decline in the fourth quarter was the key factor in lowering the average price for the entire year. In terms of market transactions, due to low prices and weak demand, the enthusiasm of end-user companies for inquiries was insufficient, leading to persistently low transaction volumes. Most companies mainly relied on contract sales, and the spot market remained quiet.

From a cost perspective, the core raw materials for phenol production are pure benzene and propylene. In the fourth quarter, market prices for both materials weakened simultaneously, resulting in insufficient cost support for phenol and further exacerbating the downward price trend. The pure benzene market has shown particularly weak performance, continuing to decline in September and October with a cumulative drop of over 8%. The sluggishness of the pure benzene market is mainly attributable to the contradiction between a sharp increase in import volumes and insufficient downstream demand. The propylene market has also been on a downward trend, with average monthly prices in Northeast and North China falling below 6,000 CNY per ton, hitting a new low for the year.

Supply-wise, the phenol industry in China welcomed a new round of capacity expansion in 2025. By the end of the third quarter, Jilin Petrochemical's 350,000 tons/year phenol and acetone unit had been built and was in the commissioning phase. In the fourth quarter, this unit began to operate stably, directly increasing the total market supply. At the same time, the phenol and acetone units of Mitsubishi Chemical and Shenghong Refining, which were previously shut down for maintenance, gradually restarted, bringing the industry's operating rate back to a stable level of around 75%, further intensifying the loose supply situation. Additionally, in the fourth quarter, the import of phenol to the East China region continued, with a total of 49,700 tons arriving at the port in December. Although the port inventory temporarily stabilized at 8,500 tons, the expected arrival of subsequent shipments continues to put pressure on the market.

From the demand side, the overall market downturn is the main reason for the decline, with bisphenol A being the core downstream of phenol, accounting for over 40% of consumption. However, both the polycarbonate (PC) and epoxy resins industries, which are downstream of bisphenol A, faced weak demand in the fourth quarter. In the PC industry, new orders were limited, and companies mainly focused on small, essential orders, leading to a 4 percentage point decrease in operating rates compared to September and a significant reduction in the purchase of bisphenol A. The epoxy resins industry was affected by the adjustment of the wind power policy, as onshore wind power no longer enjoys the value-added tax refund upon collection. As a result, the industry's operating rate was maintained at around 51%, further reducing the enthusiasm for raw material procurement. The weak demand from downstream industries created a negative feedback loop, leading to a lack of effective support in the phenol market demand, and the downward pressure on prices continued to increase.

As of December 26, the phenol quotations in major markets across China are as follows:

It is expected that, in the short term, China’s phenol market will continue to experience volatile conditions under downward pressure, with limited room for price increases. On the supply side, phenol-ketone plants such as those operated by Yangzhou Shiyou have plans to resume operations, and shipments from nearshore and domestic trade vessels will keep flowing in, potentially leading to a slight increase in market supply and putting downward pressure on prices. On the demand side, demand for bisphenol A—the core downstream product—is expected to decline slightly, while procurement in other downstream industries remains largely driven by “cautious, essential needs” with insufficient willingness to proactively build up inventories. As a result, the demand side is unlikely to provide effective support for price recovery in the short term. In the short term, the industry will continue to face pressures, and companies need to pay close attention to inventory control and cost management. Looking ahead, the industry’s high-quality development will depend on optimizing production capacity, upgrading technologies, and steadily recovering downstream demand.