In February, the Chinese phenol market showed an overall upward trend, with expectations for March

February 27 news

In February 2026, the Chinese phenol market broke away from its previous low and volatile pattern, showing a steady upward trend. Enhanced cost support, structural adjustments in the supply side, and the recovery of downstream demand collectively drove the price increase. Market transactions improved compared to January, with "rising prices and stable volumes" setting the stage for the industry's full-year recovery.

In February, the price of phenol increased in a stepwise manner, with a significant price increase. Data shows that the benchmark price on February 1st was 6,450 CNY/ton, rising to 6,650 CNY/ton by the 27th, representing a 3.1% increase for the month. The average price in the core market of East China was around 6,500-6,550 CNY/ton, while the northern region, led by factories, saw a slightly higher price increase, with a reasonable regional price difference.

From an annual perspective, the current phenol price is at the median level of the past year. As of February 27, the minimum phenol price in China over the past year was 5,670 CNY/ton, the maximum was 7,947.50 CNY/ton, and the median was 6,808.75 CNY/ton. The current price still has some room to move up from the median, indicating potential for further increases.

(1) Strong cost-side support lays the foundation for price increases.

Phenol's core raw materials, pure benzene and propylene, have shown strong performance this month, providing strong support. Pure benzene has seen a slight correction with balanced supply and demand, while the propylene market is improving, highlighting cost transmission. Although phenol and ketone factories are still incurring losses, the extent of the losses has not increased, and there is a stronger willingness to maintain prices. This month, factory profits decreased by 90 CNY/ton to -926 CNY/ton compared to last month, and companies are pushing up quotes, driving the market upward.

(2) Structural adjustments on the supply side, with marginal improvement in the supply-demand balance.

In February, the phenol supply in China was "generally abundant but locally tight," with the operating rate increasing by 3 percentage points from January to 89%. The 320,000 tons/year plant in Yangzhou Shiyou was running at full capacity, and the operating rate of the 650,000 tons/year plant in Zhenhai Refining & Chemical increased from 65% to 85%, adding to the market supply. Meanwhile, the shutdown of the first phase 300,000 tons/year plant in Huizhou Zhongxin and the 60% operating rate of the 630,000 tons/year plant in Ningbo Formosa helped to alleviate the supply pressure.

In terms of inventory, the port inventory in Jiangyin increased to 38,500 tons during the Spring Festival, but the pressure on contract deliveries for cargo holders was low. The price hike led by northern factories boosted supplier sentiment without suppressing prices. In 2026, the growth rate of new phenol production capacity in China slowed down, with a decrease in import volume and significant success in domestic substitution. The import dependency is expected to drop below 3%, further consolidating the dominant position of the Chinese market.

(3) Downstream demand is gradually recovering, supporting the market rebound in China.

The Spring Festival holiday led to a decrease in the operating rates of downstream bisphenol A and phenolic resins to 70.84% and 20%, respectively, with weaker demand support. After the holiday, enterprises gradually resumed work, and terminal demand recovered and procurement was released after the Lantern Festival, providing substantial support to the market. Bisphenol A accounts for more than 40% of phenol consumption. New facilities in 2026 are expected to drive demand growth, and the current optimistic outlook is boosting procurement. Phenolic resins are benefiting from the recovery of the real estate market and the trend toward lightweight vehicles, leading to an expected increase in operating rates. The demand for high-end phenol in the new energy vehicle and photovoltaic sectors is injecting momentum into the market.

In February, overall, first, prices steadily increased, relying on rational cost and demand increases, without speculative fluctuations; second, the game between supply and demand was evident, with high port inventories and suppliers holding firm on prices, while delayed resumption of work downstream and improving demand formed a standoff, leading to moderate transaction volumes; third, regional coordination was observed, with the North leading the price increase and East China and South China following, maintaining reasonable price differences.

In the short term, the market in March is expected to continue its upward trend. On the supply side, Huizhou Zhongxin's Phase I plans to restart, while Phase II will undergo maintenance. Shandong Ruilin's new facility is scheduled for commissioning in mid-March, and the purchase of raw materials for startup is expected to have a positive impact. On the demand side, downstream sectors are fully resuming operations, with new bisphenol A facilities driving demand growth. In terms of costs, benzene and propylene are relatively strong, supporting a moderate increase in prices.

In the long term, 2026 is a critical year for industry recovery in China, characterized by "slowing supply growth and steady demand recovery." The total annual production capacity is expected to be 6.5 million tons per year, with a capacity utilization rate of 83%, and consumption is estimated at about 5.8 million tons. Supply and demand are trending towards balance, with the price center moving upward and profitability improving. Risks such as fluctuations in raw materials and weaker-than-expected demand recovery need to be monitored.

In summary, the phenol market in China is clearly on an upward trend in February 2026, which is an important signal of industry recovery. Subsequent optimization of supply and demand will drive the market to gradually emerge from its low point and steadily recover.