[Introduction]: On the first working day after the May Day holiday, the phenol market was in a wait-and-see consolidation. The following day, prices fell sharply under pressure from new capacity releases and sluggish demand, dropping by as much as 700 yuan/ton over two trading days. The price center quickly fell below 8,000 yuan/ton. During this period, the price spread between phenol and benzene widened to around 700 yuan/ton, nearly on par with acetone. Losses for phenol-ketone enterprises deepened, and the declining price trend caused buying sentiment to slow. At the beginning of this week, crude oil prices rose, coupled with the relatively high monthly average price of phenol. Suppliers showed a firm and bullish attitude, temporarily stimulating inquiry activity, and the price decline stopped and rebounded.

1. Inverted Price Spread Between Phenol and Benzene Widens, Losses for Phenol-Ketone Enterprises Deepen

Since April 21, domestic phenol-ketone enterprises have shifted from profit to loss. As of now, the average loss is above 1,000 yuan/ton, and the loss period has lasted 14 working days. Currently, some enterprises have slightly reduced operating loads, and the overall industry operating rate has fallen to around 79%.

The price spread between East China phenol and benzene began to invert on April 21. In May, the inverted spread rose to 500-700 yuan/ton, once again creating the unconventional situation where "bread is cheaper than flour." During this period, the firmness of raw materials did not drive phenol upward, while the weakening of raw material prices exerted a bearish sentiment on phenol, mainly reflected in slower end-user buying interest and lack of inquiry participation. Since the market price rebounded on the 11th, participants have paid more attention to crude oil price volatility, using the rise in crude oil to support firm offers. Even though benzene prices showed a weakening trend, its impact has not yet been evident, mainly because the inverted situation needs gradual mitigation and repair.

2. Correlation Analysis of Phenol Prices with Related Products

Table 1: Recent Price Changes of Phenol and Related Products (Unit: yuan/ton)

| Category | May 12 | April 22 | Change | Change % |
| :--- | :--- | :--- | :--- | :--- |
| East China Benzene | 8280 | 8480 | -200 | -2.36% |
| Shandong Propylene | 9245 | 9350 | -105 | -1.12% |
| East China Phenol | 7715 | 8375 | -660 | -7.88% |
| East China Acetone | 7700 | 7200 | 500 | 6.94% |
| East China Bisphenol A | 9900 | 9950 | -50 | -0.50% |

Looking at the trend of more declines than gains for phenol, comparing the price benchmarks on May 12 and April 22, the support from the cost side weakened. The phenol market was more constrained by insufficient end-user buying interest, showing the largest decline during the period. In contrast, the related product acetone performed strongly, forming a sharp contrast with the phenol decline and contributing to curbing the expansion of losses for phenol-ketone enterprises. The main downstream product, bisphenol A, was relatively resilient. As phenol prices fell, the profit margins in the bisphenol A industry improved, but the loss situation was difficult to reverse.

3. Comprehensive Cost and Supply-Demand Analysis to Assess Phenol Development Trend

(1) From the supply side: Around the middle of the month, imported cargo replenishment exceeds 18,000 tons. Imported goods generally have a limited impact on spot supply. Regarding domestic phenol-ketone units, some units have seen slight adjustments in operations recently; on May 12, Gaohua Materials' phenol-ketone unit shut down as planned for maintenance, expected to last until around the end of June; on May 19, Yangzhou Shiyou's phenol-ketone unit plans a short-term shutdown, expected to last until the 27th. Affected by these unit operations, the industry operating rate is expected to drop from 79% to 76%. Considering imports and domestic phenol-ketone unit operations, short-term supply fluctuations are expected to be limited.

(2) From the cost side: Currently, the inverted price spread between phenol and benzene is 500-600 yuan/ton. This phenomenon deviates from market logic and is not expected to result in a prolonged inversion like in 2024, but it will take time to correct. Phenol-ketone enterprises are suffering severe losses, and the monthly average price level is relatively high. Suppliers' willingness to offer concessions may weaken, and any push for price increases will need to follow end-user buying interest.

(3) From the demand side: In May, the main downstream bisphenol A units are under concentrated maintenance, expected to gradually reduce the industry operating rate to below 60%. The reduction in demand is larger than the reduction in supply. Other downstream plants are cautiously procuring, mainly for just-in-time replenishment, with short purchasing cycles and low continuity, which may periodically restrict transaction volumes.

In summary, considering cost, supply, and demand, the domestic phenol market is expected to focus on firm offers or tentative price increases in the short term. During this period, attention should be paid to changes in crude oil and cost prices, contract delivery progress of holders, changes in average price levels, and end-user procurement cycles. Caution is advised.