【Introduction】 In early June, the phenol market began an upward trend driven by upstream unit maintenance news and trade inquiries. During this period, favorable signals such as price leadership from Shandong plants and tightening spot supply were timely released. As of June 10, the East China phenol market had risen by nearly 600 yuan/ton. Since this rally was not closely tied to cost factors, the mainstream price spread between phenol and benzene in East China turned positive on June 4, ending the inversion phase that had lasted over a month. Currently, supply-demand dynamics in the phenol market outweigh cost-side influence. In the short term, factors such as the monthly average price level and phenol-ketone enterprise profitability need comprehensive analysis, and price fluctuations are expected to be limited.

Causes and Supporting Factors for Phenol Price Increases

1. Improved Supply-Demand News and Factory Price Leadership
On June 2, news of upstream unit maintenance began circulating, prompting phenol holders to react swiftly. Meanwhile, trade inquiries followed, halting the price decline and triggering a rebound. This was followed by price leadership from Shandong plants, which boosted downstream end-user inquiry enthusiasm and amplified the phenol price increase.

Sentiment from last week partially carried into this week. At the start of the week, news of tightening spot supply in Shandong spread, keeping holders confident and reluctant to offer concessions. However, when prices pushed above 8,000 yuan/ton, the high cost faced resistance in passing downstream, leading to a stalemate or slight weakening.

2. Extended Period of Losses for Phenol-Ketone Enterprises
As of now, phenol-ketone enterprises have been operating at a loss for one and a half months. The extended loss pressure led to load reduction or shutdown operations, but these had limited impact on contract volumes. Therefore, in May, the phenol market lacked clear upward momentum and instead showed weakness. In June, with coordinated supply-demand news, market attention shifted to July maintenance schedules, which in turn influenced June shipment progress, creating opportunities for price increases. Although phenol-ketone enterprise losses are unlikely to turn profitable in the short term, the loss margin has seen some recovery.

3. Limited Support from By-Product Acetone Reinforces Phenol's Primary Product Status
At the beginning of June, the acetone market price fell by 200 yuan/ton, after which price fluctuations remained narrow. Given the overall industry's loss margin and duration, this has to some extent strengthened companies' willingness to hold prices firm.

History of Phenol-Benzene Price Inversion
In late April, the phenol market entered a downtrend under the dominant bearish factor of sluggish demand. The price correlation between phenol and benzene weakened, leading to an inversion of their price spread. In May, the launch of output from new facilities exacerbated supply-demand imbalances, amplifying phenol's decline and periodically widening the inversion spread with benzene.

At the start of June, phenol responded first to the positive news of upstream unit maintenance. Shandong plants took the lead in raising prices, and the upward trend spurred inquiry participation, lifting phenol market prices. The situation where phenol was cheaper than benzene—a "bread cheaper than flour" anomaly—was fundamentally inconsistent with market logic, so it could not persist long. By tightening supply, the market boosted demand recovery, substantially improving the phenol-benzene price spread inversion.

Short-Term Phenol Market Outlook
Currently, although the loss margin for phenol-ketone enterprises has narrowed, the loss situation is unlikely to turn positive in the short term. As the primary product, phenol may exhibit some resistance to downward pressure. Information regarding July maintenance plans for domestic phenol-ketone units has not been fully confirmed, so the extent of early digestion of positive news needs monitoring. The price spread between downstream bisphenol A and phenol has narrowed, resulting in notable profit losses. The phenolic resin sector is entering the off-season of summer heat, warranting caution against negative effects from hesitant high-price downstream chasing. However, spot supply in some phenol regions remains manageable, and international news is volatile. While prices face downside risks, the expected magnitude is limited and relatively controllable. Conversely, upward moves will encounter demand-side resistance. Therefore, short-term market price fluctuations are expected to be narrow in both directions. While the stable phenol price and the improved spread with benzene send positive signals, the impact on both supply and demand must be viewed rationally. Prudent operations are advised.