SunSirs: Soaring and Then Plummeting! The Rollercoaster Ride of Phenol Prices Has Come to an End. What's Next?

In early March 2026, the domestic phenol market experienced a rollercoaster ride—from a continuous surge to a sharp drop in two days, with price fluctuations exceeding 2,500 RMB/ton, catching upstream and downstream enterprises in the industry chain off guard.

This market movement was caused by disruptions from geopolitical conflicts in the Middle East, drastic fluctuations in costs, and the tug-of-war between supply and demand.

I. Breaking News: Middle East Geopolitical Conflict Ignited Price Increase

The surge in phenol prices in early March was primarily driven by the geopolitical situation in the Middle East. Iran's announcement of restrictions on the Strait of Hormuz—a crucial passage carrying 20% of the world's crude oil—directly triggered global energy supply shortages.

The chain reaction was immediate: Brent crude oil prices surged in a single day, and this impact quickly spread to the upstream of the phenol industry chain. Prices of benzene and propylene, the core raw materials for phenol, soared.

Data shows that phenol prices in East China have risen sharply for six consecutive working days, with some factories raising their prices for eight days, reaching a high of 11,050 RMB/ton, a cumulative increase of 30.53% compared to the end of February. The entire industry chain has seen a general price increase, with downstream bisphenol A prices rising by as much as 35.80%, and market sentiment once turned into a frenzy.

On March 9th, Sinopec North China raised its listed price for phenol by 3,400 RMB/ton, setting the price at 12,000 RMB/ton for cash on delivery. Sinopec East China also raised its listed price for phenol by 3,400 RMB/ton, setting the price at 12,000 RMB/ton for cash on delivery.

II. A Sharp Decline: Prices Plunged by Over 2,500 RMB/Ton in Two Days, End-User Buying Halted abruptly

The surge in prices was ultimately unsustainable, and March 10th became the "turning point" in this round of market activity. On that day, crude oil prices surged and then fell back, directly causing a simultaneous decline in core raw materials such as benzene and propylene. The cost support for phenol weakened instantly, and its price plummeted from its peak.

On March 10, the price of phenol in East China fell back to 9,000 RMB/ton; on March 11, the price further dropped to 8,500 RMB/ton, with a cumulative drop of more than 2,500 RMB/ton in just two days, significantly erasing the gains accumulated in the previous period.

The sharp price fluctuations directly shattered purchasing confidence in the end-market. Downstream factories were extremely sensitive to the weakening of high prices and quickly adjusted their purchasing strategies, resulting in an "emergency brake" on buying activity—market transactions were sluggish, most companies chose to wait and see, and only made small purchases for immediate needs, making it difficult to increase transaction volume. Market sentiment quickly shifted from fervor to caution.

III. Market Outlook: With multiple variables intertwined, what is the potential for price increases or decreases?

Currently, the phenol market is in a recovery phase after a sharp rise and fall, and its future trend is dominated by multiple variables, with uncertainties remaining.

From the perspective of core influencing factors, the first is the continued disruption caused by geopolitical risks: the EU has extended the permitted flights over airspace affected by the Middle East conflict until March 18th, meaning that the energy market will continue to be influenced by geopolitical factors, which will then impact the phenol industry chain.

Secondly, there is a divergence in cost levels: on March 11, benzene prices rebounded after falling due to production cuts by petrochemical companies (with varying prices in the north and south markets), while propylene prices continued to decline, resulting in divergent cost support for phenol. It is worth noting that the price difference between phenol and benzene in East China has widened from 500 RMB/ton at the end of February to around 1,000 RMB/ton. 500 RMB/ton may become a critical point for price fluctuations, while the current phenol-acetone market exhibits a wide price inversion, reducing companies' willingness to sell at lower prices.

There are also uncertainties on both the supply and demand sides: On the supply side, the operating rate of domestic phenol and acetone enterprises remains at 89%, with some units still undergoing maintenance or reducing their operating rates, supporting spot prices; on the demand side, the operating rate of downstream bisphenol A and phenolic resin is sluggish, and end users have low acceptance of high prices, resulting in insufficient follow-up buying. If demand does not improve, prices will still face downward pressure.

In addition, the average monthly price also provides some support - the average monthly price of phenol is expected to remain above 8,000 RMB/ton in March, and there is limited room for further price declines. The market is likely to rationally recover around the average monthly price.

According to SunSirs, the current phenol price surge is a result of geopolitical conflicts, cost transmission, and supply-demand imbalances. The market is currently in a phase of rational correction. Barring any new unforeseen factors, short-term phenol prices will fluctuate narrowly within the range of 8,300-9,200 RMB/ton, gradually alleviating the market's price inversion and seeking a new supply-demand equilibrium.

For companies across the industry chain, the safest approach right now is to "operate cautiously": upstream companies can adjust the operating schedule of their facilities based on inventory and profits; downstream companies should adhere to the principle of purchasing only as needed to avoid stockpiling or empty warehouses; and the entire industry chain needs to closely monitor changes in the situation in the Middle East, raw material prices, and end-user demand, and make timely adjustments.

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