【Introduction】 In early March, escalating tensions in the Middle East drove a broad-based rally in bulk chemical products. The phenol market experienced six consecutive trading days of gains, with some producers raising prices for eight straight days, resulting in an increase exceeding RMB 4,000/tonne. However, as end-user resistance to high prices became evident and the prices of its two key feedstocks retreated from highs, the phenol market shifted to a downward trend, with reduced buying participation from downstream plants. Due to the instability in feedstock price movements, which have been volatile with both ups and downs, the phenol market has largely followed these fluctuations, though exceptions exist. In April, the circulation volume of the pure benzene market is expected to tighten, with a foreseeable drawdown in social inventories, suggesting prices are likely to remain firm. Considering the rationality of the price spread between phenol and pure benzene, the phenol market may experience overall positive fluctuations, contingent upon downstream buying interest and price acceptance levels.

I. Quantitative Analysis of Price Linkages for Phenol and Major Related Products in March

Prices for phenol and related products across the industrial chain saw significant increases in March. Comparing end-of-month prices for March and February, the increase ranged between RMB 2,300-3,400/tonne; based on monthly average prices, the increases varied from RMB 1,700-2,900/tonne. The Middle East conflict served as the catalyst for the price surge across the chain. Additionally, factors such as shifts in product-specific supply and demand dynamics influenced the market, leading to varying drivers for each product and divergent performance after prices peaked and corrected. Downstream end-users participated cautiously in inquiries, resulting in subdued trading activity.

II. Phenol-Acetone Producers Shift from Loss to Profit; Monitoring Changes in the Phenol-Pure Benzene Market Spread

In March, following the broad-based price increase in the phenol chain, the price spread between East China phenol and pure benzene markets fluctuated continuously. During this period, the spread reached its highest point at RMB 1,280/tonne on March 10th and its lowest at RMB 275/tonne on March 27th. Calculating the production gross margin for phenol-acetone enterprises based on Sinopec's East China listed prices, the sector turned profitable on March 10th, reaching a recent high of around RMB 2,500/tonne on March 11th-12th. Subsequently, due to divergent trends in feedstock costs and phenol-acetone prices, industry profits fluctuated around the break-even point in the latter part of the month, ending March marginally above the break-even line.

Analyzing the fluctuation range of the phenol-pure benzene market spread and the changes in phenol-acetone producer gross margins in March, the impact of short-term fluctuations in feedstock pure benzene prices on phenol remains a key focus. Generally, the probability of the spread falling below RMB 300/tonne is relatively low, and such periods tend to be brief. When the spread reaches RMB 1,000/tonne or above, it typically attracts increased attention from downstream end-users, with potential for downward correction. In late March and towards month-end, the price performance of the by-product acetone was stronger than that of phenol. After turning profitable in March, phenol-acetone producers hold relatively strong profit expectations. Therefore, short-term industry gross margins are likely to fluctuate above the break-even line, though minor losses may occur intermittently. However, such periods are expected to be short-lived and manageable.

III. Analyzing Through Cost and Supply-Demand Dimensions to Forecast April Price Dynamics

1. Monitor the Phenol-Pure Benzene Spread; Use Recent Levels to Gauge Fluctuation Range

Since 2026, the lowest spread between East China phenol and pure benzene in January fluctuated between RMB 125-185/tonne, persisting for eight working days before gradually recovering to the range of RMB 300-500/tonne. In March, market price volatility was significant, with the spread reaching a high of RMB 1,280/tonne and a low of RMB 275/tonne. Observing the pattern of this spread in Q1, the probability and duration of it falling below RMB 300/tonne are relatively low and short. This level can serve as a reference baseline to assess the influence of feedstock pure benzene price fluctuations on the phenol market.

2. Monitor Trends in Related Product Acetone; Integrate with Phenol-Acetone Producer Profits for Comprehensive Judgment

As related products, the price fluctuations of phenol and acetone occasionally exhibit mutual influence. In late March, phenol, as the primary product, saw its price fluctuation range narrow, while the by-product acetone showed relative strength, narrowing its price gap with phenol to around RMB 1,500/tonne. Recently, the phenol market has been more influenced by feedstock price volatility, with supply-demand factors having a lesser impact. Conversely, the acetone market has shown greater flexibility recently, being less affected by feedstock price swings than phenol, with market participant behavior and supply-demand dynamics playing a more prominent role. In the longer term, it is necessary to balance the profit fluctuation space for phenol-acetone enterprises by integrating cost and phenol-acetone price trends. Profits are likely to fluctuate around the break-even line, with no expectation of prolonged losses for the time being.

3. Monitor Supply-Demand Variables to Determine Market Direction

While focusing on cost and related product price movements, supply-demand developments must also be tracked. In April, some producers have planned reduced contract volumes, and the arrival of imported shipments is expected in late April or month-end, suggesting limited pressure from spot market supply. On the demand side, operating rates in the bisphenol A (BPA) industry are projected to decline in April, reducing phenol demand. Other downstream sectors are likely to remain cautious in purchasing, mainly conducting replenishment based on rigid demand inquiries.

Conclusion
Integrating factors such as supply-demand, cost-profitability, and price trends of related products, domestic phenol prices are expected to experience frequent short-term fluctuations within a potentially limited range. The key focus should be on international developments affecting crude oil and pure benzene, as these will directly impact downstream end-user buying sentiment. This sentiment will, in turn, determine market trading volumes, influence holders' sales strategies and price trends. Prudent operation is advised.