China Phenol Market Weekly (May 18-May 24, 2026): Demand collapse led the decline, profit upside down approaching historical extremes

This week, China's phenol market accelerated its downward trend under the double squeeze of "high cost and collapsed demand. According to data from the Business News Agency, the benchmark price of phenol fell from 7750 yuan/ton on May 18 to 7800 yuan/ton on May 22, a cumulative decline of about 7% during the month (8387.50 yuan/ton at the beginning of the month). The actual transaction price in East China has dropped to 7775 yuan/ton. The gross profit loss of phenol ketone co-production reached -721 yuan/ton, which is a rare extreme value in recent years, and the whole industrial chain has fallen into a deep loss.

Price and cost: pure benzene high is a double-edged sword

phenol core raw material pure benzene (accounting for about 70% of the cost) remained high this week, Sinopec East China listing price of 8300 yuan/ton, pure benzene futures BZ2606 main contract from 8300 yuan/ton fell to 8218 yuan/ton. China's Jiangsu port pure benzene inventory continued to be depleted, from 173000 tons at the beginning of the month to 148000 tons on May 18, with a total of 25000 tons of depot in two weeks. The pace of depot removal was strong, forming a phased support for the price of pure benzene.

However, the high level of pure benzene is a double-edged sword for phenol-theoretically blocking the deep falling space, but in reality it is the last straw to crush the downstream. Phenol enterprises would rather stop production than purchase raw materials at high prices when their profits are upside down -721 yuan/ton. The gap between the "financial attribute" and "industrial attribute" of pure benzene continues to expand. The benchmark price of propylene (accounting for about 20% of the cost) fell to 9134.33 yuan/tonne this week, down 3.79 per cent from the beginning of the month, but the decline had limited effect on the improvement of phenol cost.

Guotai Junan Futures pointed out that according to the valuation of US $85/barrel of crude oil, pure benzene has support around 7800 yuan/ton, and there is limited room for further deep decline. However, the problem of downstream failure has not been solved, and the bottom of the valuation is not the bottom of the price.

Supply and demand pattern: operating rate fell off the cliff, demand overall off-season

on the supply side, phenol operating rates plummeted from 82.36 percent to 75.50 percent this week, a weekly decline of 6.94 percentage points to historically low levels, a direct result of deep losses forcing companies to take the initiative to reduce their negative. In contrast, pure benzene petroleum benzene operating rate of 66.04, hydrobenzene operating rate of 67.99, upstream supply elasticity is also very low.

The demand side is weakening across the board. PC (polycarbonate) operating rate fell another 7 percentage points to 67% month-on-month, a new low for the year, cars, plate shell and other terminal consumption is the main reason. The operating rate of PTA in the electronic-grade field and downstream is only 64.66 percent, and the overall terminal demand of the chemical industry resonates downward, forming a two-way contraction weak balance of "supply contraction-weaker demand", with prices dominated by the demand side.

The comprehensive weighted operating rate of pure benzene downstream has dropped to 73.30. Except for aniline (profit of about 1648 yuan/ton), caprolactam (-2659 yuan/ton), adipic acid (-1470 yuan/ton), phenol (-721 yuan/ton) and styrene (-187 yuan/ton) have all lost money, and the profit of the whole industrial chain has dropped to freezing point.

Macro disturbance: The situation in the United States and Iraq is the biggest variable.

The current traffic volume in the Strait of Hormuz is only about 5% before the war, and the physical supply is extremely tight. On May 20, the market due to the U. S.-Iran agreement draft rumors triggered a one-day crude oil plunge of more than 6%, but then rebounded, oil prices in the $95-110/barrel range wide swing, the cost side of the uncertainty is great. The Fed's hawkish signals continue, U.S. bond yields are up, and the probability of a rate cut during the year is close to zero, which is a long-term negative for commodities.

Short-term outlook and operational recommendations

it is estimated that the price of phenol will run in the range of 7600-7900 yuan/ton in the next 1-2 weeks, with weak shocks, and it is possible to explore the psychological barrier of 7500 yuan/ton. Acetone is relatively resilient due to historically low port inventories (14000 tons, down 41.7 per cent on the month).

For traders, the current primary strategy is to control the risk to go to the warehouse, the inventory turnover days reduced to 3-5 days, to avoid the downward channel in the bottom of the warehouse; 7500 yuan/ton below can be considered strategic layout. The core observation indicators are: the pace of de-stocking of pure benzene ports, whether the weekly operating rate of phenol falls below 70%, and the direction of the U. S.-Iran negotiations-once the channel is substantially restored, the supply of pure benzene will drive the cost end of phenol further downward, the lower space or expand to 7000-7200 yuan/ton range.