Supply and Demand Both Weigh Down, China's Phenol Prices Continue to Fall in May

May 29th, according to news,

In May 2026, the Chinese phenol market as a whole experienced a downward trend with no significant rebound, and a bearish sentiment persisted throughout the month. After the May Day holiday, the market quickly declined. In the middle and late part of the month, major Chinese producers continuously lowered their ex-factory quotes, further dragging down the spot price. In terms of prices, at the beginning of the month, the spot price in East China was 8,300-8,500 CNY/ton, which fell to 7,400-7,600 CNY/ton by the end of the month, a monthly price decrease of 11.7%. The regional supply flow was imbalanced, with continuous inflow of Shandong supplies into East China, exacerbating local inventory pressure.

Insufficient cost support from raw materials: The spot price of upstream pure benzene has slightly weakened, and volatile declines in crude oil prices have dragged down the overall costs of chemical products. Coupled with ample supply of pure benzene itself and subdued downstream demand, the raw material side is struggling to provide price support for phenol, causing the cost floor to loosen and opening up room for phenol prices to fall.

Market supply is generally abundant: The average operating rate of Chinese phenol and acetone plants remains at a high level of 82%. Although some local plants have undergone maintenance and reduced loads, large-scale integrated refining and petrochemical facilities are operating stably, ensuring an ample supply of goods. At the same time, industry inventories are gradually increasing, and traders are eager to sell and convert inventory into cash. The market has a relaxed flow of goods, and suppliers are lowering prices to reduce inventory, leading to a continuous weakening of the market trend.

Downstream demand remains weak: The main reason for the decline in the market is the lack of strong demand from the two major downstream sectors of phenol. The operating rates of the bisphenol A and phenolic resins industries remain low, with their own market conditions being weak and profits limited. Downstream factories are only purchasing based on immediate needs, with no concentrated restocking activities. Additionally, the slow recovery of the real estate and automotive industries, coupled with high inventories of finished products downstream, has led to extremely cautious raw material procurement, with no positive signals from the demand side.

Post-holiday demand fell short of market expectations, causing bullish sentiment within the market to quickly dissipate. Traders and downstream buyers are adopting a wait-and-see attitude, resulting in sluggish spot transactions. The simultaneous weakening of futures prices further erodes market confidence, with sellers dominating the market and leaving the price trend lacking any momentum for a rebound or stabilization.

East China: As a market bellwether, prices have seen the largest decline, and overall trading activity remains subdued. North China/Shandong: Following East China’s downward trend, supply is primarily geared toward export, with price declines slightly smaller than those in East China. South China: Supported by logistics and local essential demand, it has shown slightly greater resilience to price drops; however, overall, it continues to follow the broader market’s downward trend.

Looking at the short term, the weak supply and demand pattern for phenol in early June is unlikely to improve, and prices will likely remain in a narrow range at low levels. The main spot price range in East China is 7,400-7,600 CNY/ton, with limited room for significant increases or decreases. In late June, as the traditional peak season for the chemical industry approaches, downstream facilities are expected to restart, and if crude oil and pure benzene costs stabilize, phenol prices could stop falling and rebound slightly, potentially reaching 7,500-8,000 CNY/ton.