Summary: In early April, the East China phenol market surged to RMB 9,650-9,700/ton before retreating. As of April 22nd, the price had fallen to RMB 8,350-8,400/ton, a drop of RMB 1,300/ton. During this period, the influence of cost drivers weakened, with sluggish end-user buying interest becoming the primary constraint. The current downtrend has increased market caution, and pre-holiday stocking sentiment has not yet materialized. While recent declines have widened, the room for further short-term downside may be limited. The medium to long-term outlook will depend more on cost and supply-demand dynamics.

I. Quantitative Analysis of Recent Price Linkages for Phenol and Key Related Products

By April 22nd, both phenol and acetone markets in East China had retreated from their highs on April 7th, with declines of RMB 1,300/ton and RMB 1,250/ton, respectively. During this period, the price drops for the two main feedstocks (pure benzene and propylene) were significantly smaller than those for phenol and acetone, squeezing the profit margins of phenol-acetone producers. Persistently weak end-user demand led to poor sales for holders, who cautiously offered discounts. Although holders are monitoring expectations for pre-holiday restocking by end-users as the month-end approaches, the falling market has slowed end-user purchasing, leading to quieter trading activity.

II. Phenol-Acetone Producer Profits Shift from Gain to Loss; Phenol-Pure Benzene Spread Narrows

As of April 22nd, the theoretical profit for phenol-acetone producers had turned negative, calculated at -RMB 1,240/ton. Concurrently, the East China phenol price was slightly below the pure benzene price by RMB 105/ton. Given the loss-making profits for phenol-acetone units and the unusual scenario of phenol priced below benzene, the downside potential for the phenol market is expected to be limited. Market focus is on whether pre-holiday restocking sentiment will emerge.

Historical data shows that instances where the phenol-pure benzene spread falls below RMB 300/ton are rare and short-lived. However, in late April, the spread continued to narrow, the price linkage between phenol-acetone and pure benzene weakened, and end-user buying slowed, leading to the phenomenon of phenol prices dipping below benzene and significant losses for producers. From the perspective of cost and industry margins, the pace of the phenol price decline is expected to slow. Whether there is room for a rebound will depend on follow-up purchasing sentiment from downstream plants.

III. Assessing the Direction of the Phenol Market Through Cost and Supply-Demand Analysis

1. The East China Phenol-Pure Benzene Spread Turning Negative May Curb Further Downside
Since 2025, the East China phenol-pure benzene spread has mostly fluctuated in positive territory, with instances below RMB 100/ton being rare. Periods below RMB 300/ton are typically brief. The re-emergence of phenol prices below benzene—a situation disliked by market participants—after over a year suggests that short-term downside for phenol prices may be contained. Attention is on pre-holiday stocking intentions. Although the downtrend has slowed buying and overall demand remains weak, the possibility of necessary restocking at suitable prices cannot be ruled out. Cost price fluctuations warrant monitoring.

2. Short-term and Medium-to-Long-Term Outlook Based on Integrated Cost and Supply-Demand Variables
In mid-to-late April, despite no new import shipments and minimal impact from domestic cargo arrivals (with Jiangyin port inventory dropping to 12,500 tons on the 20th), end-user inquiry and participation remained low. Expectations for pre-holiday restocking were disrupted by the falling market. Due to high costs and monthly average prices, coupled with producer losses exceeding RMB 1,000/ton, holders' willingness to offer further discounts weakened by the 22nd. Some afternoon higher offers increased market caution, hinting at a potential stabilization or试探性上涨 (tentative increase). The short-term focus is on downstream purchasing intent; there may be room for a modest recovery. Around late April/early May, the arrival of import shipments is expected, though their impact on spot supply is typically limited; this factor can be viewed as less significant. The long-term outlook requires comprehensive analysis of cost and multiple supply-demand factors. Post-holiday, attention should be on end-user inventory digestion, which may support upward movement. Cost price fluctuations during this period will also be crucial. Monitoring the price linkage between phenol and pure benzene is advised, and cautious operation is recommended.