According to China Chemical News, despite the traditional peak season of “Silver October,” the phenol industry chain—from raw materials to downstream applications—is experiencing a “peak season without peak demand.” Taking phenol as an example, market prices have fallen from a high of 7,050 RMB per ton in early September to 6,400–6,450 RMB per ton by late October, marking an 8.5% decline.

Regarding the outlook, multiple industry analysts believe that the supply-demand mismatch remains difficult to resolve. In the short term, the phenol industry chain market will continue to face downward pressure, with further room for decline.

Raw Materials: Synchronized Weakness Undermines Support

As the two primary feedstocks for phenol-ketone plants, both benzene and propylene markets have recently weakened simultaneously, resulting in insufficient cost support for phenol.

The benzene market has been particularly sluggish. Its September monthly average price fell 3.13% month-on-month, making it the worst-performing product in the phenol chain. The downtrend continued into October with prices dropping over 5%. Currently, benzene prices in some regions hover around 5,400 RMB, marking a year-on-year decline exceeding 25%.

Benzene imports reached a record high of 4.1147 million tons in the first three quarters, up 41% year-on-year. However, persistent losses in benzene downstream sectors, coupled with weak terminal demand and low enthusiasm for raw material procurement, have kept the benzene market sluggish. Looking ahead, with few benzene plants scheduled for maintenance and newly commissioned facilities gradually increasing production rates, domestic refinery operating rates are expected to rise. Meanwhile, benzene imports will remain at elevated levels, maintaining overall supply abundance. Market prices are more likely to decline than rebound.

The propylene market, another key feedstock, also shows no signs of halting its decline. By the end of October, monthly average propylene prices in Northeast, North, and Northwest China had all fallen below 6,000 RMB, hitting new lows for the year. This stems from significantly lower benchmark prices for upstream crude oil and propane, weakening cost support. Furthermore, ample propylene supply coupled with lackluster demand has driven prices downward. In the short term, bearish cost pressures, sustained ample supply, and the onset of the off-season for end-user demand suggest propylene prices may continue to decline.

The persistent downturn in the phenol market is closely tied to the concentrated release of new capacity.

China's phenol production capacity has expanded continuously this year. In the third quarter alone, Jilin Petrochemical commissioned a 350,000-ton-per-year phenol-ketone unit. This new capacity release coincided with the traditional peak demand season, exerting significant downward pressure on the phenol market. In September, phenol-ketone units at Mitsui Chemicals, Shenghong Refining & Chemical, and Longjiang Chemical underwent maintenance shutdowns, causing the phenol industry's operating rate to drop below 70%. This supply tightening briefly pushed phenol prices above 7,000 RMB on September 9.

As the maintenance units gradually restarted and new capacity stabilized output, supply pressure in the phenol market resurfaced. Some enterprises faced high inventory levels and sluggish shipments, forcing them to sell at discounted prices, leading to a sustained decline in phenol prices. Looking ahead, maintenance plans for Zhejiang Petrochemical and Ningbo Taiwan Chemical's phenol-ketone units, coupled with the impending restart of Fuyu Petrochemical's phenol-ketone unit, particularly amid the arrival of concentrated import shipments, indicate that the phenol supply side remains ample. The market shows no signs of a short-term turnaround.

Bisphenol A: Deep Losses Amid Weak Demand

As a key downstream product of phenol, the bisphenol A market has also experienced a pronounced mismatch between supply growth and slowing demand this year. Downstream demand growth has lagged far behind supply expansion, plunging the bisphenol A industry into deep losses.

BPA prices briefly rose during the “Golden September” period, breaking through the 8,200 RMB threshold. However, downstream resistance grew, and the anticipated pre-National Day holiday stockpiling failed to materialize, sending the BPA market into a downward trajectory. By the end of October, the domestic BPA market average price had fallen 5.74% month-on-month.

Looking at the downstream of BPA, the polycarbonate (PC) industry has seen limited new orders, with most purchases being small, essential-need orders for inventory replenishment, and no intention to build positions. Currently, the PC industry's operating rate is around 77%, down 4 percentage points from September 30, leading to a decrease in BPA consumption.

Another downstream sector, the epoxy resin industry, also struggles to gain momentum, with current operating rates hovering around 51%. Recent adjustments to wind power policies now limit the 50% VAT refund policy to “sales of self-produced electricity generated from offshore wind power.” This means that starting November 1, onshore wind power will no longer qualify for the 50% VAT refund policy. This development will negatively impact the epoxy resin industry, indirectly affecting epoxy resin companies' procurement pace for raw material bisphenol A and creating negative feedback across the entire supply chain.

As an integrated internet platform providing benchmark prices, on November 7, the benchmark price of phenol from SunSirs was 6200.00 RMB/ton, a decrease of 2.36% compared with the beginning of the month (6350.00 RMB/ton).

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