In early March 2026, the domestic phenol market experienced a roller coaster ride – from continuous surges to two days of sharp declines, with price fluctuations exceeding 2500 yuan/ton, catching upstream and downstream enterprises off guard.
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This market trend is caused by the disturbance of geopolitical conflicts in the Middle East, severe fluctuations in costs, and the tug of war between supply and demand.
1、 Sudden: Geopolitical conflict in the Middle East ignites reasons for price increases
The rise in phenol prices in early March was mainly due to the geopolitical situation in the Middle East. Iran’s announcement of restrictions on the Strait of Hormuz, a critical passage responsible for 20% of global crude oil transportation, directly triggers global energy supply shortages.
A chain reaction immediately emerged: Brent crude oil surged in a single day, and this impact quickly spread to the upstream of the phenol industry chain. As the core raw materials of phenol, pure benzene and propylene have seen a significant increase in prices.
Data shows that phenol in East China has risen sharply for 6 consecutive working days, with some factories raising their prices for 8 days, reaching a maximum of 11050 yuan/ton, a cumulative increase of 30.53% compared to the end of February. The industry chain has also risen in sync, with downstream bisphenol A rising by as much as 35.80%. Market sentiment has been in a frenzy for a while.
On March 9th, the listing price of Sinopec North China phenol increased by 3400, with a cash withdrawal of 12000 yuan/ton executed. The listing price of Sinopec East China phenol increased by 3400, with a cash withdrawal of 12000 yuan/ton executed.
2、 Sudden decline: Over 2500 yuan in two days, terminal buying urgently brakes
The soaring market is ultimately difficult to sustain, and March 10th became the “turning point” of this round of market. On that day, crude oil prices surged and fell, directly driving core raw materials such as pure benzene and propylene to simultaneously decline. The cost support for phenol instantly weakened, and prices quickly plummeted from their peak.
On March 10th, the price of phenol in East China fell to 9000 yuan/ton; On March 11th, the price further dropped to 8500 yuan/ton, with a cumulative drop of over 2500 yuan/ton in just two days, and the previously accumulated gains were greatly eroded.
The drastic fluctuations in prices have directly undermined the purchasing confidence of the end market. Downstream factories are extremely sensitive to the weakening of high prices and quickly adjust their purchasing strategies. The buying trend shows an “emergency brake” situation – market trading is light, and most companies choose to wait and see, with only a small amount of essential purchases, making it difficult to increase trading volume. Market sentiment quickly shifts from fanaticism to caution.
3、 What is the potential for fluctuations in the future market when multiple variables are interwoven?
At present, the phenol market is in a recovery stage after a sharp rise and fall, and the future trend is dominated by multiple variables, with uncertainty still present.
From the perspective of core influencing factors, the first is the continuous disturbance of geopolitical risks: the EU has extended the flight of conflict airspace in the Middle East until March 18th, which means that the energy market will still be affected by geopolitical factors, which will then be transmitted to the phenol industry chain.
Secondly, there is a differentiation in the cost side: on March 11th, pure benzene rebounded after falling due to the impact of reduced production by petrochemical companies (with mixed fluctuations in the North and South markets), while propylene continued to fall, and phenol cost support showed differentiation. It is worth noting that the price difference between phenol and pure benzene in East China has increased from 500 yuan/ton at the end of February to around 1000 yuan/ton, and 500 yuan/ton may become a critical point for price fluctuations. Currently, there is a wide inversion in the phenol ketone market, and the willingness of enterprises to sell below has weakened.
There are also variables on the supply and demand side: on the supply side, the operating rate of domestic phenol ketone enterprises remains at 89%, and some units are still undergoing maintenance/load reduction, supporting spot prices; On the demand side, downstream production of bisphenol A and phenolic resin is flat, and the acceptance of high prices by end-users is low. There is insufficient follow-up on buying orders. If demand cannot improve, there will still be downward pressure on prices.
In addition, the monthly average price also provides some support – it is expected that the monthly average price of phenol in March will remain above 8000 yuan/ton, and the space for further price decline is limited. The market is likely to rationally repair around the monthly average price.
From the perspective of Shengyi Society, this round of phenol market is the result of the combined effects of geopolitical conflicts, cost transmission, and supply-demand imbalance, and the current market is in a rational regression stage. Without the influence of new sudden factors, the short-term price of phenol will fluctuate narrowly around the range of 8300-9200 yuan/ton, gradually easing the market inversion and seeking a new balance point between supply and demand.
For upstream and downstream enterprises in the industrial chain, the most prudent approach at present is “cautious operation”: upstream enterprises can adjust the pace of equipment operation reasonably based on inventory and profits; Downstream enterprises adhere to the principle of on-demand procurement and avoid stockpiling or empty inventory; The entire industry chain needs to closely monitor the situation in the Middle East, changes in raw material prices and terminal demand, and make timely adjustments.
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