Looking at the period from 2021 to 2025, the phenol market experienced continuous growth, but saw a decline in 2023 due to a temporary oversupply. In 2025, the Chinese phenol market entered a deep downward adjustment cycle, with prices continuously falling throughout the year, reaching their lowest level in the past five years by the end of the year. The industry as a whole faced serious challenges of supply-demand imbalance and pressure on profits.
In 2025, the average annual price of phenol in the East China market was 6,850 RMB/ton, a decrease of 13.44% compared to 2024. The fourth quarter was the core period of the decline, with prices in the East China market falling by 15.44% from October to December, and mainstream market quotations converging to the 5,750-5,850 RMB/ton range at the end of the year. The market downturn was mainly due to oversupply caused by capacity expansion, insufficient demand driven by weak downstream industries, and weakened cost support due to falling raw material prices, with multiple negative factors converging. The industry competitive landscape showed characteristics of "deepening domestic substitution and highlighting the advantages of integrated enterprises," and will gradually transform from scale expansion to high-quality development in the future. According to data monitored by SunSirs, the domestic phenol market price in East China was 7,857 RMB/ton on January 1st and 5,755 RMB/ton on December 30th, a decrease of 26.82%.
Increased production capacity combined with imports had resulted in ample market supply
In 2025, the domestic phenol industry entered a new cycle of capacity expansion, leading to a significant increase in total supply. By the end of the third quarter, Jilin Petrochemical's 350,000 tons/year phenol-acetone plant was completed and put into operation, achieving stable output in the fourth quarter, directly exacerbating market supply pressure. Meanwhile, several phenol-acetone plants that had been shut down for maintenance, including those of HighChem New Materials (Mitsui Chemicals) and Shenghong Refining & Chemical, resumed operations, bringing the industry's operating rate back to a stable level of around 75%, further amplifying the oversupply situation.
Regarding imports, phenol shipments continued to arrive in East China during the fourth quarter, with a total of 49,700 tons arriving in December. Although port inventories remained stable at 8,500 tons, the expected continued arrival of subsequent shipments in transit continued to put downward pressure on market prices. In the long term, domestic phenol production capacity had increased from approximately 4.2 million tons/year to nearly 6 million tons/year between 2021 and 2025, with a compound annual growth rate of 7.3%. The cumulative effect of this rapid capacity expansion was concentrated in 2025, forming a significant basis for a market downturn.
Weakness in downstream industries was creating negative feedback that was spreading to upstream sectors
Sustained weak demand is the core driving factor behind the phenol market reaching a five-year low. Bisphenol A, a key downstream product of phenol, accounts for over 40% of consumption, and its demand directly dictates the trend of the phenol market. In addition, traditional sectors such as phenolic resins and salicylic acid account for approximately 35% of demand, while demand from new energy-related sectors accounts for less than 20%. In the fourth quarter of 2025, both the core downstream and traditional downstream industries experienced weak demand, creating a negative feedback loop throughout the supply chain.
Specifically, the downstream polycarbonate (PC) industry saw limited new orders for bisphenol A, with companies mainly stocking up on small orders to meet immediate needs. The industry's operating rate decreased by 4 percentage points compared to September, leading to a significant reduction in bisphenol A purchases. The epoxy resin industry was impacted by adjustments to new wind power policies, with onshore wind power no longer enjoying the value-added tax refund policy. The industry's operating rate remained at only around 51%, resulting in a substantial decline in raw material procurement, which further affected the bisphenol A market and ultimately impacted phenol demand. In traditional downstream sectors, the continued sluggishness of the real estate industry led to weak demand for phenolic resins, and the demand growth in the new energy sector had not yet fully offset the decline in traditional sectors, ultimately resulting in a lack of effective demand support for the phenol market.
The market prices of raw materials, benzene and propylene, were weakening simultaneously, resulting in weak cost support
The benzene market performed particularly weakly, with a cumulative decline of over 8% in September and October, mainly due to the structural contradiction between surging imports and insufficient downstream demand; the propylene market also showed a downward trend, with average monthly prices in Northeast and North China falling below 6,000 RMB/ton, reaching a new low for the year. The weak performance of raw materials deprived phenol of cost support, further releasing downward pressure on prices.
In 2026, the phenol market is expected to experience price fluctuations within a constrained range, with potential for marginal improvement in the second half of the year.
From a full-year perspective, the loose supply situation is unlikely to change fundamentally, demand is gradually recovering but the momentum is limited, and there is some expectation of cost-driven price increases. As a result, market prices are likely to exhibit a phased pattern of "low-level fluctuations in the first half of the year and a moderate recovery in the second half." The average price for the year may be slightly higher than in 2025, but will still remain in a relatively low range.
In 2025, the Chinese phenol market was primarily characterized by a significant downward trend, with prices reaching a five-year low at the end of the year. This was mainly due to a combination of negative factors: oversupply caused by capacity expansion, insufficient demand due to weak downstream markets, and weakened cost support from declining raw material prices. The industry landscape is undergoing rapid restructuring, with integrated leading enterprises demonstrating a clear advantage, and import substitution continuing to deepen. Regarding the market outlook for 2026, industry participants should focus on the following: firstly, precisely managing inventory levels, optimizing procurement and sales strategies based on seasonal demand changes and price fluctuation patterns to mitigate risks; secondly, strengthening supply chain collaboration, with upstream companies signing long-term contracts with key downstream customers to stabilize production and sales, and downstream companies securing core raw material supplies to ensure stable production; and thirdly, accelerating technological upgrades and product structure optimization, focusing on the research and development of high-value-added phenol downstream products to enhance core competitiveness.
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