[Lead] Since the start of 2026, phenol/acetone producers have experienced three positive profit cycles. The first ran from March 9 to March 16, a six-working-day profit period in which profit peaked at 2,500 yuan/ton. The second ran from March 26 to April 20, spanning 17 working days, with profit ranging from a low of 67 yuan/ton to a high of 639 yuan/ton. The third lasted only four working days, from August 3 to August 7. This third cycle was the shortest, mainly due to abnormal movements in phenol/acetone prices relative to costs. At present, the market's loss-making situation is unlikely to improve in the near term. Stronger by-product acetone prices have helped recover some of the losses for phenol/acetone producers, but the short-term loss-making situation is likely to persist. Attention should be paid to changes in costs and phenol/acetone product prices.
I. Brief analysis of profit/loss turning points for phenol/acetone producers
The main raw materials for phenol/acetone production are pure benzene and propylene. Fluctuations in costs and product prices directly affect the profitability of phenol/acetone producers. During the two positive profit cycles in March, phenol/acetone and its upstream and downstream products all showed unexpectedly broad and dramatic price increases. Profit changes were mainly tied to the speed at which product prices responded to the upward movement. The brief profitability in early August was mainly due to the opposite price trends of phenol and the feedstock pure benzene.
In early March, phenol prices reacted fastest, with gains exceeding cost increases, pushing phenol/acetone producers into profitability. However, because the price gains could not be smoothly passed down the chain, the phenol market saw a brief downward correction, during which profits turned slightly negative before returning to positive. Throughout this period, phenol/acetone prices outperformed costs, extending the profitable cycle.
In late April, phenol prices weakened. After the May Day holiday, phenol/acetone prices fell more than costs, worsening producer losses. In late May, the decline in phenol slowed, and lower pure benzene prices provided some relief, narrowing the spread between the two and correspondingly reducing phenol/acetone producers' losses. In early August, tight phenol spot supply supported higher prices, while costs weakened at the same time, bringing producer profits back to positive. However, with weak downstream buying interest, once the support from tight supply faded, phenol prices moved lower. During the same period, costs were rising, but this upward pressure could not be passed on to phenol. As phenol and pure benzene prices converged, industry profits turned negative. Sellers' willingness to offer concessions diminished, giving the market some support, but the uptick was limited and lagged behind cost increases. Losses for phenol/acetone producers gradually widened. In late August, acetone supply tightened further as domestic cargo vessels were delayed. Acetone prices quickly rose above 7,000 yuan/ton. The stronger by-product acetone price offset some of the cost increases, slightly easing phenol/acetone producers' losses.
II. Comparison and analysis of phenol, pure benzene, and acetone prices and price spreads
Pure benzene, as the main feedstock for phenol/acetone production, plays a decisive role in cost fluctuations. Phenol is the main product. When phenol prices are close to or even below pure benzene prices, creating a price inversion, industry losses tend to widen. During such periods, attention should be paid to whether acetone can strengthen enough to offset some of the cost pressure. Therefore, when tracking phenol/acetone profits, it is essential to monitor the price relationships among pure benzene, phenol, and acetone.
In 2026, phenol and pure benzene experienced two notable inversion periods. During the period from April 20 to June 3, which lasted more than a month, the spread between the two ranged from a low of -710 yuan/ton to a high of -35 yuan/ton. During this time, downstream end-user buying interest was sluggish, and sellers, facing poor sales, kept cutting prices. With buyers avoiding purchases in a falling market, trading was relatively quiet. In June, the trend reversed. Phenol/acetone profits were in a prolonged loss period, while the by-product acetone trend was flat. Phenol prices rose on expectations of upstream plant maintenance and leading price increases by Shandong phenol plants, which repaired the inversion between phenol and pure benzene. In late August, the price correlation between phenol and pure benzene was weak, so during periods when the two prices were similar, the spread shifted quickly between positive and negative.
In late April 2026, phenol prices fell below 8,000 yuan/ton. During that period, acetone prices remained relatively strong, and the spread between the two narrowed to 10 yuan/ton, putting phenol's status as the main product in jeopardy. As acetone market demand weakened, prices stalled at 7,800 yuan/ton, then fell below 7,000 yuan/ton in early June, below 6,000 yuan/ton in late June, and below 5,000 yuan/ton by the end of June. During the same period, phenol performed relatively well, and the spread between phenol and acetone recovered to above 2,000 yuan/ton. In late July, acetone prices returned to the 6,000 yuan/ton range, while phenol fluctuated around 8,000 yuan/ton, with the spread adjusting to above 1,500 yuan/ton. In late August, the phenol market was constrained by weak end-user buying interest, limiting upward price momentum. Meanwhile, driven by the key bullish factor of tight acetone spot supply, acetone prices were quickly pushed above 7,000 yuan/ton, narrowing the spread with phenol to around 1,000 yuan/ton.
III. Short-term industry profit outlook based on cost and phenol/acetone price movement expectations
In the current loss-making cycle for phenol/acetone producers, acetone market prices are relatively strong. However, end users have limited acceptance of the current high prices. It will be important to watch the sustainability of the tight-supply narrative, cost price fluctuations, and end-user buying intentions; a rational pullback is possible. In the phenol market, attention should be paid to news such as the restart timing of Shenghong Refining & Chemical's phenol/acetone unit, the shutdown timing of Moyiwei Chemical (Shanghai)'s phenol/acetone unit, and the startup timing of Ruilin's bisphenol-A unit. Both supply and demand are expected to increase. In addition, cost prices have been volatile recently; any sharp rise or fall could affect phenol market sentiment, especially as end-user buying interest changes markedly. The market may find it easier to fall than to rise. However, around the end of the month and beginning of the next, sellers face little shipping pressure, so the magnitude of price fluctuations may remain controllable. On balance, the loss-making situation for phenol/acetone producers is not expected to improve significantly in the short term.
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