High costs superimposed on weak demand European phenol acetone corporate profits under pressure

At the beginning of this year, the supply of acetone in Europe was tight. Now, with the increase of regional production and the arrival of imported goods, the shortage of goods has eased and the spot price of acetone continues to fall. The increase in the contract price of propylene raw materials in Europe in April compressed the profitability of acetone spot compared to propylene, however the price of acetone was still higher than the contract price of propylene at that time. The price of the propylene contract rose again in might, further growing the pressure on acetone manufacturers to protect profits.

Compared with 2025, the price of acetone in Europe rose sharply at the beginning of this year, and the overall profitability of phenol and acetone producers improved. Sales of the two major items fell sharply in 2025, and corporate profits were dismal. This year's higher spot acetone market helped companies recover some of their profits. Since the beginning of this year, phenol contract price increase from the low slightly increased by 15 euros/tonne, while the rise in benzene prices also brought a weak positive to companies. However, just recently, tensions in the Middle East have pushed up TTF gaseous prices in Europe, squeezing production profits. while most trade contracts have energy surcharge clauses, many companies say that this fee cannot fully cover the cost increase caused by the increase in energy. An energy surcharge was charged in the phenol contract trading in April, and the surcharge was canceled in might when natural gaseous prices fell. Even if the cost of raw materials and energy falls in the future, the weak economic ecological stability will still restrict the sector's profit repair space.

Market participants said that the previous rise in acetone prices was not due to the increase in terminal demand, however was dominated by changes in the supply pattern. Affected by the conflict in the Middle East, the supply of methyl methacrylate (MMA) imported from Asia and the Middle East in Europe has decreased, and the demand to regional MMA production has increased, which has supported the market. However, in the current weak demand market, buyers are reluctant to stock up at high prices, and the market procurement heat has cooled significantly.

On the contrary, the downstream bisphenol A(BPA) market is flat, South Korea's supply continues to flow into Europe, failed to efficiently drive the consumption of phenol and acetone, if the regional bisphenol A market is good, will efficiently boost the demand to two major raw materials.

According to sector sources, the previously delayed Middle East acetone supply has arrived in Europe, and US supplies also entered the market in the second quarter. Due to the high risk of price fluctuation after arrival, companies seldom purchase Asian imports temporarily. Driven by a slight rebound in demand to phenol and an increase in export orders, the supply of phenol and acetone in Europe increased slightly, and companies slightly increased the operating rate of the plant. however on the whole, affected by the low demand to phenol and high production and operating costs, the overall operating rate of the sector is still low.

On the demand side, geopolitical conflicts continue to push up inflationary pressures and the outlook to market demand is uncertain. Phenolic resin demand slightly improved compared to the fourth quarter of last year, however the main downstream construction sector market downturn, the overall demand increase is limited; downstream bisphenol A, caprolactam sector is also dragged down by the automotive, construction sector demand, operating pressure.