SunSirs: The Domestic Phenol Market Trended Upward Overall in March and May Remain at Elevated Levels in April

In March 2026, the domestic phenol market trended upward overall; prices climbed steadily from the lows recorded at the beginning of the month. Although subject to brief corrections, the overall magnitude of the price increase was significant, characterized by a dynamic driven by rising costs, supported by supply-demand fundamentals, and further boosted by market sentiment. Consequently, industry sentiment witnessed a marked improvement compared to February.

The pass-through effect from crude oil, compounded by raw material shortages, provided strong support

Phenol production relies on benzene and propylene, maintaining a close correlation with crude oil prices. In March, escalating tensions in the Middle East drove international crude oil prices above $100 per barrel; WTI and Brent crude posted weekly gains of 35.63% and 27.88%, respectively—an impact that was directly transmitted to the chemical raw materials sector.

Benzene prices have surged significantly, with spot prices in East China reaching 8,245 RMB/ton. Propylene prices have trended stronger in tandem—with the average price in East China rising by 332 RMB/ton compared to January—collectively driving up the cost of phenol production. Furthermore, restricted naphtha exports from the Middle East have led to a decline in benzene imports; consequently, inventories at East China ports fell by 6.60% month-on-month to 269,000 tons, thereby further reinforcing cost-side support.

Supply Side: Plant maintenance, compounded by a contraction in imports, had resulted in tight supply

In March, the operating rate of domestic phenol and acetone enterprises stood at 88%–89%; however, facility maintenance at sites such as Huizhou Zhongxin and Zhongsha Tianjin—coupled with Ningbo Taichem operating at a reduced load of only 60%—resulted in a contraction of supply. Concurrently, overseas imports of phenol declined due to feedstock constraints in the Middle East. This factor, combined with domestic producers prioritizing contract shipments and limited spot market circulation, led traders to withhold inventory and hold firm on prices, thereby exacerbating the supply tightness. 

Demand Side: Resilient Downstream Essential Demand Supported Procurement

The price of Bisphenol A—which accounts for over 40% of phenol consumption—rose by 35.8% in March. A recovery in demand from end-use sectors, such as electronics and automotive, spurred increased procurement and subsequently boosted demand for phenol. Demand from downstream industries—including aniline and phenolic resins—also showed signs of recovery; although downstream buyers adopted a wait-and-see attitude during a mid-month price correction, continued purchasing to meet immediate needs provided support for a subsequent price rebound.

Market Sentiment: Risk Aversion Fueled Price Hikes

The conflict in the Middle East has triggered global risk-aversion sentiment, fueling strong bullish expectations in the market as traders hold back inventory, thereby driving prices upward. At the beginning of the month, market activity shifted from a wait-and-see stance to active buying on the rise, propelling prices to a peak; although a correction occurred during the middle and latter parts of the month, the combined support from market sentiment, production costs, and supply-demand fundamentals drove a steady recovery in prices.

Market outlook

According to SunSirs, the current supply-demand landscape is improving. On the cost front, prices are expected to remain elevated due to geopolitical disruptions; regarding supply, plant maintenance continues while import replenishment remains limited; and on the demand side, activity is poised to strengthen further as the peak season in April approaches. Consequently, phenol prices are expected to remain at high levels. However, should geopolitical tensions ease—leading to a pullback in crude oil prices—or if downstream demand falls short of expectations, the market may experience narrow fluctuations in the short term. Over the medium to long term, market participants should closely monitor developments in geopolitics, raw material markets, and end-user demand; the industry is likely to continue oscillating at elevated levels.

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