July 30th News
In July, the Chinese phenol market as a whole showed an upward trend with a higher center, completely reversing the weak situation in June. The market trend was characterized by narrow trading at the beginning of the month, price increases in the middle of the month, and stability at high levels at the end of the month. The supply and demand fundamentals improved in stages, and the market trading activity steadily increased, resulting in a month-on-month price increase for the entire month.
In the first ten days of the month, Shenghong Refining and Chemical increased the contract price by 150 CNY/ton, boosting the sentiment in the spot market. Additionally, on July 5th, Jiangsu Ruiheng's 650,000 tons/year core phenol and acetone unit underwent temporary maintenance, leading to a tightening of market supply and low inventory levels, which intensified the sentiment of spot shortages. Market quotations rose collectively, and the phenol price quickly broke through 8,100 CNY/ton, setting a new high for the period. At the end of the month, the upward trend slowed, and the market stabilized. The mainstream quotation in East China remained steady at 8,200-8,250 CNY/ton, with the average price for the month around 8,185 CNY/ton. Overall, the high-level fluctuations narrowed, and transactions were stable, establishing a strong market position.
1. Plant maintenance is concentrated, with a significant reduction in supply. July and August are the traditional maintenance periods for phenol and ketone plants. This month, multiple large and small plants underwent maintenance or reduced their operating rates, leading to a decline in the overall industry's operating rate. Coupled with the continuous inventory clearance in the market earlier, social inventory levels are low, and the circulation of spot goods is tight. Traders have a strong desire to hold prices firm, which has become the core support for the upward trend in the market.
2. Downstream rigid demand has recovered, with solid support from demand. This month, the prices of core downstream products such as bisphenol A and epoxy resins have increased, and profitability has improved, leading to a steady rise in facility utilization rates. This has resulted in an increase in rigid demand procurement for phenol. At the same time, phased stockpiling by end-user industries such as coatings, electronics, and construction materials has effectively absorbed market supplies, tightening the supply and demand balance and contributing to the upward trend in phenol prices.
3. Raw material costs are firm, supporting the market trend. The prices of upstream raw materials such as pure benzene and propylene in China are stable with a slight increase, keeping production costs at a high level. This effectively locks in the cost floor for phenol, limiting the downward space in the market. Coupled with the rising sentiment of price increases within the market, it supports the continued strong performance of the market.
The market as a whole remains relatively strong, yet there’s no sign of a one-sided surge. This is largely constrained by the weak recovery in terminal demand. Downstream enterprises are mostly replenishing stocks based on immediate needs, and overall sentiment toward stockpiling and preparing inventory remains cautious. As a result, high-priced transactions have slowed down to some extent, putting downward pressure on the magnitude of price increases. Throughout the entire market cycle, buyers and sellers continue to engage in a tug-of-war, with prices fluctuating upward in a volatile manner.
In the short term, in early August, plant maintenance is still ongoing, and the tight supply situation will continue. Coupled with steady recovery in demand, the phenol market will maintain a strong and narrow fluctuation at a high level, with limited downward space. In the medium to long term, by mid-to-late August, as maintenance facilities gradually resume operations, industry production will increase, and the supply gap will be repaired. If there is no significant boost in demand, the market's upward trend will slow down, and it is likely to enter a phase of high-level consolidation.
