Phenol Weekly: Geographically driven by the "high fall" and market rebalancing.

1. market review: inverted V-shaped trend, geography is the core switch

this week, China's phenol market experienced a "sharp rise and fall". At the beginning of the week, affected by the attack on the Jubail Industrial Zone in Saudi Arabia, the market's concern about the interruption of the global supply of chemical raw materials was superimposed on the "gold, silver and four" peak season, and the price of phenol surged to 9,600-10,300 yuan/ton. On April 7-8, a temporary ceasefire agreement between the United States and Iran was reached, and the Strait of Hormuz was expected to resume navigation. Brent crude oil plummeted from $109.03/barrel on April 2 to $95.92/barrel on April 9, a decrease of 12.02.%. The core raw material East China pure benzene fell more than 7% in a single day, phenol cost support instantly collapsed.

As of April 10, the reference price of phenol in the business agency fell back to 9,150 yuan/ton, down 2.14 from April 1 (9,350 yuan/ton). The price of East China port has dropped to 9,150-9,200 yuan/ton, and the market is weak. Mainstream manufacturers such as Longjiang Chemical Co., Ltd. immediately lowered 300 yuan on April 9 after raising 200 yuan/ton. The pace of price adjustment clearly confirmed the rapid switching of market logic.

2. fundamentals: high supply, blocked demand, under pressure on profits

supply end maintain high load. In March, the operating rate of phenol ketone reached 90.93 percent, and the output of phenol was 494000 tons, up 11.1 percent from the previous month. However, there are structural hidden dangers in global supply-India's Deepak Phenolics (with an annual production capacity of 330000 tons) was shut down on April 3 due to propylene supply outage. South Korea's LG Chemical and Lotte Chemical also dropped their losses due to naphtha shortage plans, and there is medium-and long-term tightening pressure on supply in Asia.

Demand side it presents a typical "high price suppression effect". Although bisphenol A consumed more than 350000 tons of phenol in March, up 10.8 percent from the previous month, and the foundation of rigid demand still exists, the price level of 10,000 yuan has touched the ceiling of the downstream, the profits of the terminal industry chain such as epoxy resin have been severely squeezed, the willingness to chase up has almost disappeared, and the procurement strategy has generally retreated to "replenish the warehouse on demand".

Profit level although the average monthly gross profit of phenol ketone was repaired from February -920 yuan/ton to -111 yuan/ton, it was still in the loss range. On April 10, phenol ketone profit (steel union) was 342 yuan/ton, down 32.68 from April 3 (508 yuan/ton). The pattern of upstream concentration of industrial chain profits has been broken by this round of decline, and the market has entered a painful rebalancing process.

A policy window worthy of attention: India implemented zero tariff on phenol from April 2 to June 30. India accounts for about 34% of China's phenol exports. This move will provide an important diversion channel for domestic supply and is currently the most substantial bullish variable.

3. Market Aftermarket Judgment and Operational Recommendations

short-term phenol prices are expected to be 8,800-9,300 yuan/ton interval shock consolidation, trend rebound momentum is insufficient, but the room for continued unilateral deep decline is relatively limited-cost bottom support (pure benzene 8,000-8,500 yuan/ton platform), low port inventory (East China port inventory has been reduced from 38000 tons to 25000 tons at the end of March) and export potential to provide lower support; However, high operating rate and weak demand constitute upper suppression.

Key Risk Variables: ① The situation in the Middle East has made waves again (the ceasefire agreement is fragile and has been repeated);② India's zero-tariff actual export signing volume; ③ the replenishment momentum after the price of downstream enterprises has fallen back.

Operational recommendations: Downstream purchasers suggest strict control of inventory to 7-10 days of consumption, the use of "small batch, multi-frequency" pricing strategy. The current market is prudent, reducing risk exposure and waiting for new drivers to be clear, which is the core strategy to deal with the high volatility environment.