India Phenol at 2025 YTD Low as Weak Rupee, China Downturn Erode Sentiment
Spot CFR India phenol prices hovered near their lowest so far this year, as a weaker rupee and the likely launch of antidumping investigations on imports outweighed talk of capacity rationalization in the region. The recent downturn in China — Asia’s largest market — has added further pressure, although some market participants remain hopeful that decreased supply could provide support in the coming weeks.
OPIS assessed the prices at $800-$842 per metric ton CFR India for the reporting week ended Thursday, with the mid-point rising $1/mt on week to mark the first increase in five weeks. Unconfirmed talk that a Southeast Asian producer plans to cease plant operations has failed to generate near-term supply concerns. Similarly, a Northeast Asian producer’s announced run rate cut from January has yet to shape a tighter supply outlook.
Some market participants anticipate that spot buying interest will pick up soon, as the effect of reduced supply from both Southeast and Northeast Asia begins to be felt.
On the other hand, several pointed to a soft rupee, ample inventories, large inflows and competitive offers from a major domestic producer as key factors likely to cap the near-term market upside.
“The market continues to be quite bad,” said a regional trader. “Supplies are there, demand is weak, and locally produced phenol is offered at very competitive prices.”
The rupee slid to a lifetime low against the U.S. dollar on Dec. 16 — after the latest round of India-U.S. trade negotiations concluded the week prior without a breakthrough — but has since recouped some lost ground. Ongoing trade talks also alleviated some market participants’ earlier concerns over a potential third round of U.S. sanctions, after the first two actions triggered significant disruptions and forced the temporary exit of several traders that had dominated India’s import market in recent years.
Historically, a weaker exchange rate would have triggered a proportionate increase in local prices. However, while Kandla ex-tank prices edged up to 83.50-84.50 rupees per kilogram ex-tank, the 0.6% on-week increase was modest and capped import parity at around $832/mt.
Some market participants attributed the muted Kandla price responses to competitively-priced domestic material and abundant inventories. Inventories at Kandla stood at around 27,300 mt as of mid-December, a market source said, representing an increase of nearly 7% from the start of the month. Inventory levels have stayed above 25,000 mt since the end of August, other than a dip below that threshold in the first half of September.
“The market is very weak. Inventory remains high and demand is slow,” said another regional trader. “The rupee depreciation is also pressuring import values.”
As discussions for January-loading cargoes got underway, some suppliers have relaxed payment terms to letters of credit of 60-90 days or longer for those buyers deemed at low risk of U.S. sanctions exposure. According to one market participant, suppliers offering LC 90 days or longer are putting competitive pressure on other sellers in the market.
As earlier reported, the U.S. Department of the Treasury’s Office of Foreign Assets Control on Oct. 9 expanded its list of Specially Designated Nationals, targeting multiple entities allegedly involved in trading Iran-origin petroleum and petrochemical products. This followed a similar announcement by the U.S. Department of State on July 30, which also cited alleged violations of Iran sanctions. Several India-based importers whose portfolios included phenol and acetone were among the designated parties.
In the immediate aftermath, concerns over a potential third SDN list prompted several regional suppliers to shorten credit terms to mitigate payment risks. For November-loading cargoes, many deals were concluded on the basis of LC at sight or LC 30 days, marking a shift from the pre-sanctions norm of LC 90 days or longer.
On top of the shake-up caused by U.S. sanctions, future trade flows could be reshaped as India’s fair-trade authority is likely to launch antidumping investigations on phenol and acetone imports by the end of this month, according to market sources.
Indian producers have filed petitions to the Directorate General of Trade Remedies to initiate antidumping investigations into phenol imports from Singapore, Thailand, South Africa and the U.S. In the first nine months of 2025, Singapore and Thailand accounted for nearly 62% of the country’s total phenol imports, according to trade data.
For acetone, producers have filed petitions to investigate imports from Singapore, Thailand, South Korea and Taiwan, China.
The collapse of China’s phenol market since late November has rippled through the region, putting pressure on markets including India.
Last week, the weekly average spot price in eastern China fell to 5,800 yuan/mt ex-tank — a level last seen in November 2020 — CMA data shows. The week also marked the fourth consecutive weekly decline, dragging import parity value down to around $679/mt before antidumping duties were added.
The start-up of Sinopec Zhenhai Refining & Chemical and PetroChina Jilin Petrochemical increased China’s nameplate phenol production capacity by 9.4% on year to 7.19 million mt/year. Supply is set to expand further in the coming months with the commissioning of Shandong Ruilin Polymer Material, which has a capacity to produce 217,000 mt/year.
For the first three weeks of December, China’s phenol plant run rates averaged 76.7%, according to data compiled by CMA, a slight increase from the November average of 75%. Meanwhile, average operating rates in the key downstream bisphenol-A sector have remained below 70% since September, the data shows.
Persistently high imports added to the length in supply. China imported 21,731 mt of phenol in November, customs data shows — up by nearly 87% on month and the highest since May — driven by elevated inflows from Northeast Asia. For the same month, China exported 988 mt, down by 84% on month and the lowest since February.
As the China market heads into 2026 with a clear supply overhang, some market participants said producers will need to find ways to balance supply with demand.
According to a China-based phenol trader, non-integrated producers may need to undertake periodic shutdowns and adjust operating rates to better align with demand, unless they can redirect excess volumes to markets abroad. However, refinery-integrated phenol makers are unlikely to make such adjustments.
“I don’t have high hopes for the market in 2026,” said the trader. “The dilemma facing Chinese producers is how the market will absorb all the phenol and acetone they produce.”
—Reporting by Trisha Huang, thuang@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com