[Introduction]: The phenol market saw a rise followed by a decline in June, with the dominant influencing factors shifting from supply to cost and demand. June 15 marked the turning point when phenol prices changed from rising to falling. Affected by the external environment, the decline in crude oil pulled the prices of both raw materials down sharply, heightening caution among phenol market participants. Downstream buying interest slowed, and holders were forced to offer concessions cautiously due to sluggish sales. The decline accelerated on June 16, and transactions slowed. In the short term, attention should be paid to cost-side trends, as the correlation between phenol and its costs is likely to strengthen temporarily. In the medium to long term, the focus should be on the dynamics and impact of phenol-ketone unit maintenance from late June to July, with market expectations pointing to potential improvement.

Rebound in early June driven by maintenance expectations and price-supporting sentiment

At the beginning of June, the phenol market quickly broke out of its downturn following news of upstream unit maintenance plans. Shandong plants led the price increase first, solidifying participants' determination to raise prices. Temporary regional supply tightening boosted the sentiment of suppliers, and the market steadily climbed above 8,000 RMB/ton before mid-June, completely reversing the price inversion against benzene. Meanwhile, the co-product acetone remained persistently weak, while phenol, as the main product, showed relative strength, somewhat narrowing the loss margin for phenol-ketone producers.

Cost plunge halts phenol’s rise and triggers decline

In mid-June, just as phenol market participants believed the uptrend would continue, a sudden shift in the external environment caused a sharp drop in costs. On June 15–16, the prices of upstream benzene and propylene fell significantly. Benzene in East China dropped from 7,580 RMB/ton to 7,190 RMB/ton, a decline of 5.15%; propylene in Shandong fell from 8,795 RMB/ton to 8,275 RMB/ton, a drop of 5.91%. The simultaneous decline in both raw materials weakened participants' confidence in supporting prices. Downstream end-users slowed their purchasing pace, and holders were forced to offer concessions cautiously due to sluggish sales. Market prices weakened from their highs, and the larger decline on June 16 increased participants’ wariness. Meanwhile, the co-product acetone fell even more sharply, raising the risk of widening losses for the phenol-ketone industry.

Demand response under the shift from rising to falling phenol prices

In early June, as phenol market prices were pushed higher, downstream buyers were incentivized to purchase on the uptrend, with supply-side improvements supporting the price rally. In mid-June, under the influence of the decline in upstream prices, downstream end-users slowed their inquiries and participation. The weakening demand caused by rising costs, combined with the bearish factors, led to a progressive widening of phenol's price decline and a slowdown in transactions.

Short-term outlook for the phenol market

Currently, prices of phenol, ketone, and both raw materials are in a downward channel. In the short term, attention should be paid to the cost price trend. If there is still room for further declines, the phenol market may continue to weaken. If costs gradually stabilize, the downward trend in phenol is likely to slow down. In the medium to long term, attention should be given to the maintenance plans of phenol-ketone units in July, mainly involving four plants: Shenghong Refining & Chemical, Longjiang Chemical, Changchun Chemical, and Guangxi Huayi. Three of these units will have their downstream bisphenol-A units shut down simultaneously. Although some of the positive impact of these maintenance plans was already factored into the market in early June, when the actual impact on shipment volumes occurs before and during the unit shutdowns, there is still a possibility that phenol prices could be pushed up again. Cautious operations are recommended.