Soaring and Then Plunging Rapidly! The Roller-Coaster Ride of Phenol Comes to an End—What’s Next for the Market?

March 12th, according to the news,

In early March 2026, the Chinese phenol market experienced a "rollercoaster" trend—from consecutive sharp increases to a two-day plunge, with a price fluctuation exceeding 2500 CNY/ton, leaving upstream and downstream companies in the industry chain caught off guard.

This market trend is driven by disruptions from geopolitical conflicts in the Middle East, sharp fluctuations on the cost side, and the tug-of-war between supply and demand.

I. Breaking News: Geopolitical Conflict in the Middle East Sparks Price Increases

The surge in phenol prices in early March was driven primarily by geopolitical developments in the Middle East. Iran’s announcement of restrictions on the Strait of Hormuz—a critical chokepoint responsible for transporting 20% of the world’s crude oil—immediately triggered global energy supply tensions.

A chain reaction soon took hold: Brent crude oil surged sharply in a single day, and this impact quickly rippled upstream through the phenol industry chain. As core raw materials for phenol, pure benzene and propylene saw their prices soar.

Data shows that phenol prices in East China have risen sharply for six consecutive trading days, with some manufacturers raising their quotes over an eight-day period, reaching as high as 11,050 CNY per ton—a cumulative price increase of 30.53% since the end of February. The entire industrial chain has experienced widespread price hikes, and downstream bisphenol A prices have surged even higher, rising by as much as 35.80%. Market sentiment at one point reached a feverish level.

On March 9, the listed price of phenol in North China by Sinopec was increased by 3,400 to 12,000 CNY/ton for cash on delivery, and the listed price of phenol in East China by Sinopec was also increased by 3,400 to 12,000 CNY/ton for cash on delivery.

II. Sharp Decline: Prices Plunge by Over 2,500 Yuan in Two Days; Retail Buyers Sudden Stop Buying

The rally, which had surged dramatically, ultimately proved unsustainable, and March 10 became the “turning point” of this round of market movement. On that day, crude oil prices soared briefly before plunging sharply, directly triggering a simultaneous pullback in core feedstocks such as pure benzene and propylene. As a result, the cost support for phenol weakened instantly, causing its price to plummet rapidly from its peak.

On March 10, the phenol price in East China fell to 9,000 CNY/ton; on March 11, the price further dropped to 8,500 CNY/ton. In just two days, the cumulative price decrease exceeded 2,500 CNY/ton, significantly eroding the previous price increase.

The sharp fluctuations in prices have directly undermined buyers’ confidence in the end-market. Downstream manufacturers, highly sensitive to rising prices, have swiftly adjusted their purchasing strategies, causing buying activity to hit an “emergency brake”—market trading has become sluggish, with most companies opting to wait and see. Only a small number of rigid-demand purchases are being made, making it difficult for transaction volumes to pick up. Market sentiment has rapidly shifted from euphoria to caution.

III. Future Market Outlook: With Multiple Variables Intertwined, What Are the Upside and Downside Risks?

Currently, the phenol market in China is in a recovery phase following significant fluctuations, and future trends are being influenced by multiple variables, with uncertainties still present.

From the perspective of core influencing factors, the first and foremost is the ongoing disruption caused by geopolitical risks: The EU has extended its ban on flights over the Middle East conflict zone until March 18. This means that energy markets will continue to be affected by geopolitical factors, which in turn will impact the phenol industry chain.

Second, there’s a divergence on the cost side: On March 11, pure benzene rebounded after falling due to reduced production by petrochemical companies (with mixed price movements between northern and southern markets), while propylene continued its downward trend, and cost support for phenol showed a diverging pattern. Notably, the price spread between phenol and pure benzene in East China has widened from around 500 CNY/ton at the end of February to approximately 1,000 CNY/ton. A spread of 500 CNY/ton may now serve as a critical threshold for price fluctuations, and currently, the phenol-ketone market is experiencing significant backwardation, weakening enterprises’ willingness to sell at lower prices.

Supply and demand also have uncertainties: On the supply side, the operating rate of Chinese phenol and acetone enterprises remains at 89%, with some facilities still under maintenance or operating at reduced capacity, supporting the spot price. On the demand side, the operation of downstream bisphenol A and phenolic resins is lackluster, and the end-users have a low acceptance of high prices, resulting in insufficient buying interest. If demand does not improve, there will still be downward pressure on prices.

In addition, the monthly average price has also provided some support—expecting the monthly average price of phenol in March to remain above 8,000 CNY per ton. As a result, there is limited room for further downward pressure on prices going forward, and the market will likely undergo a rational correction around the monthly average price.

Looking at the current phenol market, this round of price fluctuations is the result of the combined effects of geopolitical conflicts, cost pass-through, and supply-demand imbalances. The market is now in a phase of rational adjustment. Assuming no new unexpected factors emerge, short-term phenol prices will fluctuate narrowly within the range of 8,300 to 9,200 CNY per ton, gradually easing the market’s inverted pricing structure and seeking a new equilibrium between supply and demand.

For companies up and down the industrial chain, the safest course of action at present is to "operate with caution": upstream companies can reasonably adjust their production schedules based on inventory and profit; downstream companies should adhere to the principle of purchasing according to demand, avoiding stockpiling or empty inventories; the entire industry chain needs to closely monitor the situation in the Middle East, raw material prices, and changes in terminal demand, and make timely adjustments.