Lead-in: In late September, the phenol market attempted to gain momentum due to tightening spot supply. However, the news of pure benzene hitting its lower limit broke this emerging trend, causing the market to shift into a downward channel. Even rising pure benzene prices could not curb the continued decline in phenol, leading to a widening inverted spread between phenol and pure benzene. After the Mid-Autumn Festival, high costs combined with price hikes by phenol plants in Shandong triggered a low-level rebound. However, limited restocking before the National Day holiday constrained further upward movement. Post-holiday, given high costs and loss-making margins, there is an optimistic outlook for the phenol market. Nevertheless, attention must be paid to end-user demand and their acceptance of higher prices, which may limit gains. Prudent operation is advised.
Table 1: September-October Phenol Supply, Demand, and Forecasts (Unit: 10,000 tons)
| Indicator | Sep | Aug | Change | % Change | Oct E | Change | % Change |
|---|---|---|---|---|---|---|---|
| Domestic Production | 47.50 | 43.71 | +3.79 | +8.67% | 53.39 | +5.89 | +12.40% |
| Capacity Utilization Rate | 79.62% | 70.90% | +8.72% | - | 86.61% | +6.99% | - |
| Bisphenol A Consumption | 31.91 | 32.16 | -0.25 | -0.78% | 36.21 | +4.30 | +13.48% |
Data Source: Chempricehub
Both supply and demand data for phenol in October show improvements. Losses from shutdowns and maintenance at phenol-acetone enterprises have decreased. Two new units are involved in shutdowns: Zhongsha (Tianjin) Petrochemical and one phenol-acetone unit at Zhejiang Petrochemical. Among them, Zhejiang Petrochemical has explicitly reduced its volume in October contracts, suggesting that domestic supply pressure will not be significant. Although market participants consider that fewer selling days in October due to the National Day holiday might affect the progress of monthly contract shipments, end-user stocking sentiment was low before the holiday. Furthermore, goods within regions can still circulate during the holiday period; therefore, the impact is considered limited.
Table 2: Statistics of Known Phenol Import Cargoes for October (Unit: 10,000 tons)
| Vessel Name | Cargo Volume (tons) | Origin | Terminal | Expected Arrival Time |
|---|---|---|---|---|
| PRABHU LAL | 9,000 | Saudi Arabia | Huaxi | Early October |
| PRABHU LAL | 5,000 | Saudi Arabia | Zhangjiagang | Early October |
Data Source: Chempricehub
According to incomplete vessel schedule statistics from Chempricehub, approximately 14,000 tons of cargo are expected to replenish supplies in early October. Consequently, port inventory levels at Jiangyin for phenol are expected to rise, likely exceeding 10,000 tons. An increase in port inventory does not necessarily indicate an increase in spot supply. Given the notable year-to-date growth in phenol exports, attention should be paid to subsequent export operations. Therefore, although import replenishment volumes are large, the impact on the spot market may be limited, and it should not be viewed purely as bearish news.
Starting from late August, phenol and pure benzene prices formed an inversion. The spread widened from 100–200 RMB/ton to 600–700 RMB/ton, exceeding 1,000 RMB/ton on September 23, and reaching as high as 2,450 RMB/ton on September 29. During the same period, profit losses for phenol-acetone enterprises exceeded 1,000 RMB/ton. Based on current cost and profit conditions, it is expected that the short-term inverted structure between phenol and pure benzene will be difficult to reverse immediately but may gradually improve, narrowing the inverted spread. Thus, there is hope for pushing phenol prices higher. However, once prices climb above 9,000 RMB/ton, end-user acceptance of high prices needs to be monitored closely.
Beyond the simultaneous increase in domestic supply and demand, there is an expectation of reduced volumes in domestic trade contracts. Imported goods are arriving according to plan to replenish stocks, but the impact on the spot market is minimal. Considering that pure benzene prices remain firmly in the high range over the long term, the inverted spread between phenol and pure benzene requires correction, which provides some support to the phenol market. However, based on price fluctuation patterns in September, end-user acceptance tends to slow down once phenol prices exceed 9,000 RMB/ton. Caution is needed regarding potential downsides from insufficient downstream follow-up purchases.
In summary, during the holiday period, the phenol market atmosphere remained quiet, approaching a closed state, though small amounts of goods circulated within regions depending on end-user demand. Post-holiday, the market may open with an upward bias. Attention should be paid to fluctuations in costs and supply-demand dynamics, adjusting strategies accordingly. Prudent operation is recommended.
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