【Introduction】: Phenol and pure benzene prices have been inverted for two months now. During this period, phenol-ketone enterprises have faced mounting losses, leading to continuous adjustments in industry operating rates, which have dropped to around 72%, a decrease of more than 10 percentage points from early October. Late last week, supply tightened at Shandong plants, triggering the first price increases. At the start of this week, upward trends were evident across regional markets, with most other plants raising their quotes. Disparities exist between northern and southern price spreads, causing market participants to operate cautiously. While rising phenol prices stimulate buying interest, end-users are also becoming cautious about restocking at high prices. Future market trends require comprehensive assessment based on costs, supply, and demand.
Phenol-Ketone Industry Under Pressure; Reduced Operating Rates Drive Price Recovery
Table 1 Summary of Domestic Phenol-Ketone Plant Maintenance Activities in October (Unit: 10,000 tons/year)
| Producer | Capacity | Start Date | End Date | Maintenance Days in Oct | Monthly Loss Volume |
|---|---|---|---|---|---|
| CNOOC-Shell | 22 | 2023/7/1 | -- | 31 | 1.87 |
| Huizhou Zhongxin (Phase I) | 18 | 2026/4/11 | -- | 31 | 1.59 |
| Huizhou Zhongxin (Phase II) | 27 | 2026/10/8 | 2026/10/12 | 5 | 0.39 |
| Guangxi Huayi | 17 | 2026/10/9 | 2026/10/15 | 7 | 0.34 |
| Zhenhai Refining & Chemical | 40 | 2026/10/13 | 2026/10/15 | 3 | 0.34 |
| Yangzhou Shiyou | 20 | 2026/10/14 | 2026/10/23 | 10 | 0.57 |
| Sinopec-SABIC (Tianjin) Petrochemical | 22 | 2026/10/18 | 2026/10/31 | 14 | 0.88 |
| Qingdao Haiwan | 20 | 2026/10/19 | 2026/10/28 | 20 | 1.14 |
| Fuyu Petrochemical | 15 | 2026/10/20 | -- | 12 | 0.52 |
| Lihua Yiweiyuan | 22 | 2026/10/24 | -- | 8 | 0.50 |
| Total | 223 | 8.14 | |||
| Data Source: Chempricehub |
As of today, ten domestic phenol-ketone units have been shut down in October. Notably, monthly contract volumes for phenol from Yangzhou Shiyou and Zhejiang Petrochemical have seen varying degrees of reduction. The number of shutting-down enterprises increased and became relatively concentrated in mid-to-late October, with some restart times yet to be determined. Consequently, the overall industry operating rate has gradually fallen to approximately 72%. This decline in operating levels is directly linked to the prolonged severe losses experienced by phenol-ketone enterprises.
Losses in Phenol-Ketone Sector Alleviated Slightly; Limited Room for Improvement in Benzene-Phenol Inversion
Since the end of August, the price spread between phenol and pure benzene has remained inverted, briefly exceeding 2,000 yuan/ton, with an inversion of around 1,000 yuan/ton being the norm. This widened loss margin for phenol-ketone producers triggered unplanned shutdowns or load reductions in October, despite no planned maintenance originally scheduled. As of today, profits for phenol-ketone petrochemical enterprises have recovered to -960 yuan/ton, and the inversion spread between phenol and pure benzene has narrowed to 800–900 yuan/ton. Although losses and the inversion with key upstream feedstocks have improved slightly, there has been no substantive change. Market development trends still warrant close attention.
Outlook for Domestic Phenol Market Based on Cost and Supply-Demand Variables
From a cost perspective, the phenol-benzene price inversion has persisted for two months. During this time, the linkage between phenol and pure benzene prices has strengthened. Fluctuations in pure benzene prices easily trigger shifts in market sentiment, so volatility in raw material costs requires monitoring.
From a supply perspective, the overall operating rate in the domestic phenol-ketone industry has declined. Attention should be paid to the expected restart times of currently shut-down units. Given the industry's overall loss-making status, it is projected that the general operating rate will remain below 80% before the end of the month.
From a demand perspective, the rapid rise in phenol prices has induced a wait-and-see attitude among end-user factories, making them cautious about purchasing at high prices. It is necessary to monitor whether high prices can be smoothly transmitted downstream and how well downstream end-use sectors follow suit with price increases.
From a monthly average pricing perspective, the October pricing cycle has concluded, with limited remaining volume in month-end contracts, resulting in low shipment pressure for suppliers. Prices are pushed to highs at the beginning of the November pricing cycle, leading suppliers to adopt more cautious operational strategies.
In summary, it is predicted that the short-term domestic phenol market will likely see cautious price increases. However, the magnitude of these increases depends on the smooth transmission of high prices to end-users. Prices may challenge the 10,000 yuan/ton level and above. Any further upside beyond this baseline depends on downstream acceptance and actual transaction volumes. Therefore, cautious operations are recommended.
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