China's phenol market trended upward in March, may remain high in April

March 31st News

In March 2026, the Chinese phenol market generally rose, with prices continuously climbing from the low point at the beginning of the month. Although there were short-term adjustments, the overall price increase was significant, exhibiting characteristics of "cost-driven, supply and demand support, and sentiment boost." The industry's prosperity improved notably compared to February.

Crude oil transmission coupled with tight raw material supplies provides strong support.

Phenol production relies on benzene and propylene, which are closely linked to crude oil. In March, the escalation of the situation in the Middle East pushed international crude oil prices above $100 per barrel, with WTI and Brent crude oil weekly price increases reaching 35.63% and 27.88%, respectively, directly impacting the chemical raw materials sector in China.

Pure benzene prices have significantly increased, with the spot price in East China at 8,245 CNY per ton; propylene has also shown strength, with the average price in East China increasing by 332 CNY per ton compared to January, jointly pushing up the cost of phenol. Additionally, due to restrictions on naphtha exports from the Middle East, imports of pure benzene have decreased, and the port inventory in East China has fallen by 6.60% to 269,000 tons, further strengthening the cost support.

Supply side: Plant maintenance combined with a reduction in imports has led to a tight supply in China.

In March, the operating rate of Chinese phenol and acetone enterprises was 88%-89%, but due to plant maintenance at companies such as Huizhou Zhongxin and Sino-Saudi Tianjin, and Ningbo Formosa's plant load being only 60%, the supply has contracted. At the same time, overseas, due to restrictions on raw materials from the Middle East, the import of phenol to China has decreased. Coupled with the fact that Chinese companies mainly ship based on contracts, with limited spot circulation, traders are holding back from selling to support prices, further exacerbating the supply tension.

Demand Side: Downstream rigid demand supports procurement

Bisphenol A (which accounts for over 40% of phenol consumption) saw a price increase of 35.8% in March, driven by the recovery in demand from end-use electronics and automotive sectors, which boosted its procurement and thus the demand for phenol. The demand for downstream products such as aniline and phenolic resins also recovered. Although downstream buyers were cautious when prices adjusted mid-month, rigid demand procurement continued, supporting the price rebound.

Market Sentiment: Risk-Aversion Sentiment Boosts Price Increases

Middle East conflicts have sparked global risk aversion, with strong market expectations of a price increase. Traders are holding back from selling, which is driving prices up. At the beginning of the month, trading shifted from a wait-and-see attitude to chasing higher prices, pushing prices up. Although there was a pullback in the middle and late part of the month, the combination of sentiment, cost, and supply-demand support led to a steady recovery in prices.

Let's look at the current situation: the supply and demand dynamics are favorable, and costs are expected to remain high due to geopolitical disruptions. On the supply side, maintenance continues and imports are limited, while demand is likely to increase as the peak season in April approaches, supporting high phenol prices. However, if geopolitical tensions ease, leading to a drop in crude oil prices, or if downstream demand falls short of expectations, the market may experience narrow fluctuations in the short term. In the medium to long term, attention should be paid to changes in geopolitics, raw materials, and terminal demand, with the industry likely to maintain a high level of volatility.