Under the crisis of overcapacity of phenol ketone, how to reconstruct the trillion market pattern of domestic breakthrough?

In 2021-2024, the phenol ketone industry chain experienced a large-scale expansion cycle, with upstream production capacity ahead of downstream demand growth, resulting in the industry shifting from high profitability to a loss-making state. The localization process has accelerated significantly, with PC imports falling by 45.6 per cent from 1.63 million tonnes in 2020 to 887300 tonnes in 2024.

The competition pattern of the industrial chain is being reshaped, the advantages of enterprises with upstream and downstream integrated layout are highlighted, and the simple phenol ketone business model is facing elimination. In the second half of 2025, the production of two new 350000-ton plants will further aggravate the contradiction between supply and demand, and the industry reshuffle is inevitable.

The fatal mismatch of the expansion cycle.

In 2021-2024, the phenol ketone industry chain staged a "dislocation drama" of the timing of the expansion of production ". Upstream phenol ketone and bisphenol A production capacity is flooding out, while downstream PC, MMA, MIBK and other products are late, mainly concentrated in 2023-2024 to start power. This timing mismatch is not accidental, but the "temptation" of high profits in the early stage. Refineries have extended their tentacles downstream, or based on their own PC and resin demand for integrated layout, but ignored the limited market digestion capacity. The upstream "advanced consciousness" eventually evolved into an imbalance between supply and demand in the middle.

The Cruel Shuffle of Profit Model

since 2023, the profit logic of the phenolic ketone industry has undergone a fundamental change. Factories that operate solely on phenolic ketones are beginning to taste the bitterness of losses, while integrated enterprises that are "well-off" are still calm. Plants with pure benzene upstream support will show strong competitive resilience in 2024, and the cost advantage will be as stable as a needle in the fluctuation of raw material prices. What is more remarkable is that those enterprises that extend the industrial chain to the PC side, especially those that deeply cultivate medium and high-end PC brands, can still maintain the profit temperature in this "cold winter.

The victory declaration of localization

in 2024, the whole industry chain of phenol and ketone handed over a bright "domestic answer sheet". Phenol, acetone, bisphenol A, PC, MMA, MIBK and other aspects of the degree of dependence on foreign collective "diving", China's chemical industry has completed a magnificent turn from "relying on others" to "self-sufficiency. What is even more exciting is that the export volume of various products rose sharply in 2024, marking China's transformation from a "big importer" of chemical products to an "export power", achieving a historic role reversal.

The "textbook" victory of PC import substitution

the PC field staged a "textbook" import substitution drama. From 1.63 million tons of import dependence in 2020 to only 887300 tons of "residual imports" in 2024, a reduction of 742700 tons in four years, with a replacement rate of 45.6 per cent. This is not only a digital game, but also a double victory of the "quality revolution" and "cost revolution" of Chinese PC enterprises. Under the dual promotion of technology upgrading and large-scale production, domestic PC not only forms a rolling advantage in price, but also wins the "votes" of downstream customers in terms of product quality and supply stability ".

Epoxy resin: the industry model of rational development

in this era of crazy production expansion, the epoxy resin industry has shown a rare "rational light". The total annual production capacity of epoxy resin in the country reaches 3.787 million tons, which is distributed among 55 enterprises in production. The relatively scattered pattern of factories within the industry is conducive to maintaining the balance of market supply and demand. Industry concentration is tilting towards the head factory, with 18 enterprises with an annual production capacity of 100000 tons or more having a total production capacity of 2.508 million tons, accounting for 66.2 percent of the total production capacity, which is conducive to the enhancement of the industry's bargaining power.

Operating rate differentiation: the iron law of the strong.

Epoxy resin industry about 55% of the capacity utilization behind, hidden a cruel reality: the strong always strong, the weak weaker. The 70-80% operating rate of the head large factory is in sharp contrast to the 50% operating rate of small enterprises, and the scale effect is the most intuitive embodiment here. Factories generally adopt the management wisdom of "fixed production by sales" so that these enterprises can cope with market fluctuations and avoid the double blow of inventory backlog and price war.

"Ice and fire" on the demand side"

the downstream demand market is staging a wonderful plot of "ice and fire. Although the demand of the wind power industry has increased, but the wind power grade epoxy resin is still concentrated in the hands of several head enterprises, orders show concentrated characteristics, often appear to rush to load the phenomenon. The coating industry was "shivering" under the impact of the decline in demand in the real estate and home improvement industries. Epoxy resin factories generally reported a 25% decline in demand in coating factories. The electronic and electrical industry in 2025 under the stimulus of the national supplement, better than 2024, for the industrial chain to bring positive signals.

Overcapacity: the sword of Damocles hanging overhead

phenol and bisphenol A have the problem of rapid expansion of production, and overcapacity in the industry has become the sword of Damocles hanging over the head of the entire industry. At present, the industry surplus is mainly resolved through production load adjustment, but the effect of this passive adjustment is like a drop in the bucket. Import compression space is basically zero, and domestic production capacity must be "hand-to-hand combat" in the stock market ". And bisphenol A and PC as solid products, inventory management problems make "pressure inventory sales" become a bitter reality that enterprises have to face.

2025: The 'final shot' for new capacity of 700000 tons"

in the second half of 2025, there is still great pressure on the phenol ketone industry to start production of two new 350000-ton plants. The new capacity of 700000 tons is tantamount to sprinkling salt on the wound for the already surplus market. Later, it is expected that the industry load is still huge shock, the price war will be more intense. This is not only a contest of production capacity, but also the ultimate test of the survival wisdom of enterprises.

Demand overdraft: the hidden worry behind the policy dividend.

Starting in 2025, the country has stimulated sales of home appliances, mobile phones, tablets and cars, and modified PC orders have improved. But the problem with the current chain is that there is an unknown end demand and the possibility of overdraft. At present, only clean household appliances have certain permeability in household appliances. At the same time, the sustainability of national subsidies in 2026 is still unknown, which casts a haze on the market prospect.

Integrated layout: the "amulet" of the new era"

in this industry reshuffle, the integrated layout of the industrial chain is becoming the "talisman" of the enterprise ". Enterprises with longer chains, such as factories with pure benzene upstream matching, will be competitive in 2024. The downstream chain will extend to the PC end, and medium and high-end PC brands will be able to maintain profitability. The degree of vertical integration will become a key factor in determining the survival of enterprises.

2025: Tranquility before the storm

2025 is destined to be a "critical year" for the phenol ketone industry, and the commissioning of two new 350000-ton plants will completely break the existing market balance. The further deterioration of the supply-demand relationship will trigger an unprecedented industry reshuffle, and the sharp fluctuation of the starting load will become the norm. In this "big wave scouring the sand", only those enterprises with cost advantages and industrial chain coordination ability can stand firm in the storm, while those enterprises with obvious cost disadvantages will face the fate of being ruthlessly eliminated by the market.

The establishment of a new order: the rules of the game for the strong

after this round of reshuffle, the phenol ketone industry chain will usher in a new era of development. The integration of industrial chain is no longer the icing on the cake, but the "necessity" for the survival and development of enterprises ". The export-oriented development model will be gradually established, and the export capacity of Chinese phenolic ketone products to the global market will become a new growth engine. High-end products and specialized segments will become a new "battleground", technological innovation and product differentiation will redefine the core competitiveness of enterprises.

Where are the investment opportunities?

In this era of uncertainty, investment opportunities are often hidden in the crisis. It is suggested to focus on those leading enterprises with complete industrial chain layout, strong technical strength and voice in the field of medium and high-end products. At the same time, closely track the progress of new production capacity and changes in downstream demand, in the market fluctuations to find the best time to enter and exit. Remember, in this drama of industry restructuring, only those enterprises that can accurately grasp the trend and flexibly adjust their strategies can occupy a place in the new pattern after the reshuffle.