I. Key Industry Development: Restructuring of European Phenol Capacity Reshapes Global Medium-to-Long-Term Supply Landscape

Significant adjustments have been made to the capacity planning of integrated phenol plants in Europe. The restart of the phenol plant in Doel, Belgium—originally scheduled for the end of 2027—has been postponed; this facility, with an annual capacity of 680,000 tons, had previously been idle for an extended period. The industry had previously planned to permanently shut down the 650,000-tonne/year integrated phenol-acetone facility in Gladbeck, Germany, by the end of 2027 and consolidate European production at the Doel site, which benefits from superior logistics. However, with the restart plan now delayed, the original capacity replacement strategy has been completely reversed.

Corporate announcements cite the following primary reasons for the delay: global phenol overcapacity and shrinking downstream demand in Europe, compounded by high energy costs and rising carbon taxes that inflate production expenses, making it unlikely for the Doel plant to achieve profitability upon a 2027 restart. Furthermore, the continued relocation of automotive and electronics manufacturing out of Europe has led to a year-over-year decline in local consumption of bisphenol A (BPA) and polycarbonate, with no expectation of a recovery in supply-demand fundamentals.

As a compensatory measure, the operational lifespan of the aging phenol-acetone facility in Gladbeck, Germany—originally slated for closure—has been extended beyond 2027. While this maintains local European supply in the short term, the aging plant suffers from high energy consumption and maintenance costs, resulting in limited flexibility in shipment volumes.

Impact of capacity changes on the global landscape: The release of new phenol supply in Europe is delayed in the medium-to-long term, leaving the region reliant on existing aging facilities for short-term supply. However, as new phenol-acetone capacity continues to come online in Asia and the Middle East, the overarching trend of global oversupply remains unchanged; adjustments are limited to the flow of goods between regions and the timing of import-export arbitrage.

II. SunSirs Benchmark Prices for Key Industry Chain Products on June 24 (Compared to June 1)

Upstream Raw Materials

Benzene (Key raw material for phenol)

SunSirs composite benchmark price on June 24: 6,435.33 RMB/ton; benchmark price on June 1: 5,735.33 RMB/ton. It rose by a cumulative 12.21% during the month, serving as the primary cost driver for the upward trend in phenol prices.

Propylene (Feedstock for co-produced acetone)

Prevailing market transaction price on June 24: 6,715 RMB/ton; average price on June 1: 6,540 RMB/ton. It rose slightly by 2.67% during the month, marginally increasing the integrated production cost for phenol and acetone.

Intermediate Products: Phenol and Co-produced Acetone

Phenol (Main product)

SunSirs composite benchmark price on June 24: 7,750.00 RMB/ton; benchmark price on June 1: 7,400.00 RMB/ton. It rose 4.73% during the month (with a slight intraday increase of 0.81%), as cost-side support outweighed demand-side drag.

Acetone (Co-product of phenol)

Prevailing market average price on June 24: 5,260 RMB/ton; average price on June 1: 5,450 RMB/ton. It fell 3.49% during the month; the weakening of this co-product compressed the overall profit margins for phenol-acetone production units.

Key Downstream Products

Bisphenol A (Largest downstream application for phenol, accounting for over 40% of consumption)

Prevailing market transaction price on June 24: 9,180 RMB/ton; average price on June 1: 9,450 RMB/ton. It fell 2.86% during the month, moving in the opposite direction of upstream phenol prices, indicating an obstruction in cost transmission along the industry chain. Polycarbonate (PC) (Downstream application of Bisphenol A)

On June 24, the average market price for general-purpose PC was 11,950 RMB/ton, down slightly from 12,120 RMB/ton on June 1; the off-season for end-user consumption dampened the volume of upstream raw material procurement.

Phenolic Resin (Second-largest downstream application of phenol)

On June 24, the average transaction price for general-purpose resin was 10,620 RMB/ton, down slightly from 10,750 RMB/ton on June 1; demand from the construction materials and automotive lightweighting sectors remained sluggish.

III. Domestic Phenol Market on June 24: Strong Cost Support vs. Weak Demand; Fluctuating Upward within a Range

1. Core driver of the upward trend: A sharp rise in the price of upstream pure benzene established a firm cost floor.

Domestic refineries and cracking units underwent concentrated maintenance this month, causing a temporary tightening of circulating supply in the pure benzene market. Coupled with lower-than-expected import arrivals, the price of pure benzene surged by over 12% during the month, significantly raising raw material costs for phenol production. Since the consumption of pure benzene per tonne of phenol produced in integrated phenol-acetone units is fixed, the increase in raw material costs was fully passed on to the production stage. Producers continuously raised ex-factory phenol quotes to recover losses, forming the fundamental logic behind the market's fluctuating upward trend in June.

Although international crude oil prices retreated following the easing of US-Iran tensions—leading to expectations of a future decline in pure benzene prices—low short-term raw material inventories meant that the anticipated drop in pure benzene has not yet materialized, allowing cost support to remain effective.

2. Downward pressure factors: Weak demand across the downstream supply chain and severely impeded cost pass-through

The current industry chain exhibits a pattern of "reverse transmission": raw material costs are rising, the intermediate product phenol is seeing a slight price increase, while downstream Bisphenol A (BPA) and end-use products are weakening.

A surge of new BPA capacity has entered the market; although this is partially offset by maintenance and the timing of new plant start-ups, overall supply remains ample. The industry operating rate hovers around just 61%, and inventories of finished products continue to accumulate. With the automotive and electronics sectors entering their traditional off-season, orders for PC and epoxy resins are insufficient; BPA producers lack the pricing power to match the rise in phenol costs, limiting raw material procurement to immediate needs and eliminating large-scale stockpiling or inventory replenishment.

Demand from traditional downstream sectors—such as phenolic resins, salicylic acid, and caprolactam—remains flat with no growth. Operating rates in the construction materials and mold industries have declined due to the off-season, preventing any significant expansion in essential phenol demand and leaving the market unable to absorb the new supply.

Prices for the co-product acetone continue to weaken, squeezing the integrated processing margins of phenol-acetone plants. Even with the slight rise in phenol prices, overall profitability for integrated producers remains limited, resulting in little incentive to ramp up operating rates or increase shipment volumes.

3. Domestic supply status: Plant maintenance constricts circulating supply, buffering downward pressure

In June, several domestic integrated phenol-acetone plants underwent scheduled maintenance, with some operating at reduced loads, causing a temporary contraction in the volume of merchant phenol available for circulation. Although the restart of previously idled plants provided some offset, the overall volume of circulating product saw a slight month-on-month decline. Social inventories remain at low-to-moderate levels, and traders holding stock show a strong inclination to support prices, further limiting the potential for a deep correction in phenol prices.

Regional disparities are evident: supply is tight and quotes are high in the key consumption region of East China. Conversely, the Shandong production hub—home to a concentration of local plants—enjoys ample supply and lower quotes; inter-regional shipments continue, maintaining stable price differentials between regions.

4. Review of market trading sentiment (June 24)

Throughout the day, the market was characterized by a pattern of "many inquiries but few actual orders." Upstream pure benzene prices remain high, prompting traders to continue slightly raising their phenol offers; however, downstream Bisphenol A (BPA) and resin manufacturers remain cautious, limiting purchases to essential volumes under monthly long-term contracts. Spot transactions are sporadic, with no significant bulk stockpiling activity. Circulating inventories are depleting slowly, and trading is dominated by small-to-medium-sized short-term orders; overall market sentiment is subdued, and price increases are sluggish.

IV. Overview of the Global Phenol Market

1. Europe: Long-term demand contraction and capacity adjustments exacerbate regional supply-demand imbalances.

The continued exodus of local automotive manufacturing has led to a year-on-year decline in demand for BPA and polycarbonate (PC), causing local phenol-acetone plants to operate at a loss for extended periods. Recent delays in restarting the Dor plant and postponing the closure of the aging Gladbeck facility mean that short-term European phenol supply relies on aging capacity, with no flexibility for long-term expansion. Local production costs are significantly higher than those in Asia and the Middle East, creating a persistent arbitrage window that drives continued imports of Asian phenol to supplement supply, thereby diverting global trade flows. EU carbon tariffs and rising energy costs continue to push up export quotes from overseas producers, simultaneously increasing import costs.

2. Asia and the Middle East: Continued capacity additions maintain a backdrop of ample global supply.

Leveraging low-cost naphtha feedstock, the Middle East has brought multiple new phenol-acetone plants online, resulting in a steady increase in phenol export volumes. Meanwhile, new integrated production capacities in Southeast Asia and China are steadily coming onstream; with the bulk of new global phenol supply concentrated in Asia, upward pressure on global prices remains capped in the long term.

Divergent downstream trends overseas: Supporting industries for electronics and photovoltaics in Southeast Asia are expanding steadily, driving moderate growth in phenol demand; conversely, end-user demand in Europe and the US remains weak, with overseas buyers pushing for lower prices, limiting the growth of export orders.

3. Impact of imports and exports on the domestic market

Domestic phenol self-sufficiency continues to rise, while import dependency steadily declines. Import arrivals in June remained stable, exerting limited pressure on the domestic market. Capacity adjustments in Europe merely alter inter-regional trade flows without changing the overall state of ample supply in Asia; however, the continued export of low-cost material from the Middle East creates potential for increased imports in the future, capping the room for domestic phenol price increases in the long run.

V. Analysis of Price Transmission Logic Across the Supply Chain

Upstream Transmission Layer (Crude Oil — Pure Benzene — Phenol)

Easing US-Iran tensions have driven crude oil prices down, creating expectations of a future decline in cracking feedstock costs. However, in the short term, domestic pure benzene units are undergoing maintenance and inventories are low, causing pure benzene prices to surge against the broader trend. This cost pressure has transmitted to phenol, forcing it to rise in tandem, resulting in a short-term divergence characterized by "weak crude oil, strong pure benzene, and moderately strong phenol."

Midstream Production and Sales Layer (Phenol — Acetone Co-production)

Phenol-acetone units produce both substances simultaneously, yet their market trends have completely diverged: pure benzene supports a slight rise in phenol prices, while weak downstream demand drags acetone prices down. The price spread between these co-products continues to narrow, limiting the recovery of integrated unit profits; consequently, enterprises lack the incentive to increase production, keeping the volume of merchant phenol in circulation low.

Downstream Transmission Layer (Phenol — Bisphenol A — PC/Resin End-markets)

A blockage in supply chain transmission has emerged: while phenol prices rise due to cost pressures, Bisphenol A faces overcapacity and a seasonal slump in end-market demand, causing its price to fall. Downstream enterprises cannot pass raw material costs further down the chain and are forced to compress their own processing margins. As a result, they continue to limit raw material procurement, preventing downstream demand from supporting a sustained surge in phenol prices. This creates a market pattern of range-bound fluctuation, with a "floor" set by upstream costs and a "ceiling" imposed by downstream demand.

VI. Outlook and Phased Trend Predictions

The domestic maintenance cycle for pure benzene units has not yet concluded, and high feedstock prices provide a cost floor; maintenance at domestic phenol-acetone units continues, constricting the supply of merchant phenol and keeping social inventories low. Additionally, the delayed restart of the Dow unit in Europe has postponed expectations for new global supply, providing slight support to market sentiment.

If the peak season for the electronics and automotive industries arrives in the second half of the year, leading to a marginal recovery in Bisphenol A demand, phenol prices may see a phased rebound. However, without a substantial improvement in end-market demand, phenol prices are likely to remain range-bound for the year, making a sustained, unidirectional upward trend unlikely.

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