SunSirs: Weighed Down by Dual Supply and Demand Pressures, Domestic Phenol Prices Continued to Decline in May

Price trend

In May 2026, the domestic phenol market experienced overall volatile downward movement; the market showed no significant signs of rebound, and a bearish sentiment prevailed throughout the entire month. Following the May Day holiday, the market witnessed a rapid decline; during the middle and latter parts of the month, major domestic producers continuously lowered their ex-factory quotations, further dragging down spot prices. In terms of pricing, spot quotations in East China stood at 8,300–8,500 RMB/ton at the beginning of the month but fell to 7,400–7,600 RMB/ton by month-end, marking a monthly decline of 11.7%. Regional supply flows became unbalanced, as supplies from Shandong continued to flow into East China, thereby exacerbating local inventory pressures.

Market analysis

Insufficient Raw Material Cost Support: Upstream benzene market trends have weakened slightly, while the volatile pullback in crude oil prices has dragged down overall costs for chemical products. Compounded by ample supplies of benzene itself and lackluster downstream demand, the raw material sector is struggling to provide price support for phenol; this loosening of the cost defense line has opened up room for phenol prices to decline.

Overall market supply remains ample: the average operating rate of domestic phenol-ketone facilities is holding steady at a high level of 82%. Although some facilities have undergone maintenance or reduced operating loads, large-scale integrated refining and petrochemical complexes continue to operate stably, ensuring an overall sufficient supply of goods. Concurrently, industry inventories are accumulating slowly; traders demonstrate a strong inclination to offload stock and realize cash, resulting in a fluid circulation of market supplies. Consequently, suppliers are driving prices lower in an effort to deplete inventories, causing market sentiment to continue its downward trend.

Downstream demand remains persistently weak: sluggish essential demand from the two major downstream sectors—Bisphenol A and phenolic resins—is the primary driver behind the current market downturn. Operating rates within the Bisphenol A and phenolic resin industries remain at low levels; facing weak market conditions and limited profitability, downstream manufacturers are engaging only in strictly need-based, sporadic purchasing, with no signs of concentrated inventory replenishment. Compounding this situation is the slow recovery of end-use sectors such as real estate and automotive; with downstream finished product inventories running high, manufacturers are exercising extreme caution in their raw material procurement, resulting in a complete absence of positive signals from the demand side.

Post-holiday demand fell short of market expectations, causing bullish sentiment to dissipate rapidly. Traders and downstream participants have adopted a strong wait-and-see stance, resulting in sluggish spot market activity. The simultaneous weakening of futures prices has further dampened market confidence; with selling pressure dominating the floor, the market currently lacks the momentum to halt its decline or stage a rebound.

East China: Serving as the market bellwether, this region witnessed the steepest declines, with overall trading volume remaining sluggish. North China and Shandong: Following the downward trend in East China, these regions focused primarily on external sales, with price drops slightly less pronounced than those in East China. South China: Supported by logistics stability and steady local demand, this region demonstrated slightly greater resilience against price drops; however, it ultimately continued to follow the broader market's downward trajectory.

Market outlook

According to SunSirs, the pattern of weak supply and demand for phenol is unlikely to improve in the short term—specifically during early June. Consequently, prices are highly likely to fluctuate within a narrow, low range; the mainstream spot price in East China is expected to hover between 7,400 and 7,600 RMB/ton, with limited room for either significant decline or substantial growth. In late June, with the onset of the traditional peak season for the chemical industry, downstream facilities are expected to undergo a concentrated restart. Coupled with the potential stabilization of crude oil and benzene costs, the phenol market is poised to halt its decline and stage a modest rebound, with prices projected to recover to the 7,500–8,000 RMB/ton range.

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