Phenol prices have been steadily declining since the beginning of May 2023. The decline in demand from the downstream solvent industries has seeded bearish market sentiments. The significantly fewer orders and a challenging domestic market for Chemical fibers and organic chemicals across Japan and South Korea have contributed to the downshift observed in the price realizations of Phenol. The economic coercion in the Western market amid debt ceiling concerns in the USA and still-high inflation in the European market has gained momentum and continued to impact the petrochemical market on a broader level.

In the domestic region of China, the fewer terminal purchases have inflicted the prices of Phenol to remain on the lower end. As per the observed market scenario, the operating rate of the Phenol Ketone plant was also low. At 48.8, a five-month low, China's official manufacturing Purchasing Managers' Index (PMI) for May further slid into contraction mode. The ChemAnalyst database has shown that the price trends of Pheol have contracted by approximately 7% on the week ending 26th May as compared to prices observed in the first week of last month. Furthermore, indicating weaker macroeconomic activity and lower price levels, one of the major manufacturers of Phenol,  Dow Inc, estimated second-quarter revenue below market estimates this week.

On the other hand, The reduction in the market value of raw material, Benzene, has imposed downside risks on the price realizations of Phenol. On the upstream front, the market players have taken advantage of cheaper Middle East Crude Oil Prices, reducing the imports of relatively high Russian Crude Oil. According to Korea National Oil Corp statistics, South Korea imported 2.03 million barrels per day of Middle Eastern oil in the first three months of this year, an 11% rise over the same period of 2022.  Thus, with moderation in input costs combined with tepid downstream inquiries, Phenol prices have undergone successive reductions. Furthermore, container freight rates for major Asian and Western markets have fallen, and as a result, the Phenol market has operated at low levels.

According to ChemAnalyst, the prices of Phenol might witness a declining trend in the APAC market. The slowdown in Western markets is likely to limit the purchasing power of the end-use industry, limiting the offtakes of Phenol. In addition, the cost support from upstream Benzene is also likely to diminish amidst sluggish consumption from its downstream end-use industries in the near term.