Introduction: On April 2, the Indian government announced a zero-tariff policy on dozens of key petrochemical products, including phenol, in response to supply chain disruptions caused by conflicts in West Asia. This measure is effective until June 30, 2026. India stated this is a temporary move to counter external shocks and will be reassessed upon expiry based on global market conditions. In recent years, India has been a primary destination for China's phenol exports. The impact of this policy on furthering phenol trade negotiations between China and India remains to be seen.

I. Analyzing China's Major Phenol Export Destinations Through Historical Data

From 2021 to 2025, India was a primary destination for China's phenol exports. However, in 2024, South Korea shifted from being a source of imports for China to becoming its top export destination for phenol, surpassing India, primarily due to economic factors. In January-February 2026, China's main phenol export destinations remained India and South Korea.

From 2021 to 2023, India consistently served as a core export market for Chinese phenol. This was particularly pronounced in 2021 when extreme cold weather in Europe and America caused local supply shortages. India exported phenol to these regions to fill the gap, tightening its domestic supply and leading to substantial imports of 112,000 tons from China, accounting for 83% of China's total exports that year. In 2024, India's phenol supply gap was not significant. Coupled with strong competition from Thailand, Saudi Arabia, and the United States, China's phenol exports to India decreased.

Starting in 2024, South Korea transitioned from a phenol import source for China to a major export destination. The fundamental reason lies in profit shifts within the phenol-acetone industry. In 2024, global phenol-acetone producers faced significant long-term losses. South Korean domestic phenol-acetone plants underwent phased shutdowns or reduced operations, leading to decreased phenol production and a supply gap. Consequently, South Korea sought imports from China and Thailand. By 2025, the loss situation in the phenol-acetone industry eased, leading to a noticeable reduction in South Korea's phenol imports from China. In terms of China's phenol export share, South Korea accounted for 51% in 2024, which dropped to 25% in 2025.

In January-February 2026, China's total phenol exports were 14,600 tons. In January, exports to India were the highest at 5,200 tons, while in February, exports to South Korea were the highest at 6,000 tons.

II. Analysis of Opportunities for Chinese Export Negotiations During India's Tariff Exemption on Phenol

Opportunities:

1. Cost Advantage: During the tariff exemption period, Chinese phenol exports to India are not subject to tariffs, directly reducing procurement costs for Indian importers and making Chinese phenol more price-competitive.
2. Supply Gap in India: Reports indicate that Deepak's phenol-acetone plant in India shut down in early April due to raw material shortages. Considering downstream demand and this supply gap, the Indian market has an increased expectation for imported cargo, providing negotiation opportunities for Chinese phenol exports.
3. Stable Supply & Established Cooperation: China holds the largest share of the global phenol-acetone market and experiences less volatility from Middle Eastern geopolitics. Additionally, the long-standing phenol trade history between China and India provides a solid foundation for cooperation.

Challenges:

1. Although the tariff exemption reduces costs for the next three months, attention must be paid to potential price fluctuations in international crude oil and pure benzene due to geopolitical instability, as well as price clause negotiations.
2. This tariff exemption is intermittent. It is advisable to seize the opportunity to negotiate export cooperation while correctly assessing the temporary export boost driven by such policy news.

Conclusion: On April 2, the Indian government announced a tariff exemption on basic chemicals, including phenol, from April to June. India itself is one of China's primary phenol export destinations, often holding the top position, though it was surpassed by South Korea in 2024 due to economic factors. In 2026, normal phenol trade continues between India and China, primarily negotiated based on local demand. The tariff exemption for Chinese phenol in India from April to June may stimulate trade flows. However, this period presents both opportunities and challenges that require careful consideration.