Phenol and Acetone Are One Price Problem

Phenol and acetone come out of one reactor in a near-fixed proportion, so a buyer of either is exposed to the market for both. Customs data from India and Europe shows it: from the first to the second quarter of 2026, acetone's average import value rose about twice as fast as phenol's in both regions, and the gap between the two narrowed sharply.

What is sourced and what is ours

One reactor, two products

Phenol and acetone are made together from cumene by the Hock process. Benzene and propylene make cumene, air oxidises the cumene, and acid splits the product into phenol and acetone, one molecule of each. By mass that is 0.617 tonnes of acetone for every tonne of phenol in theory (58.08 divided by 94.11, from the molar masses).

A 2016 European industry eco-profile reports an output split of 57.5% phenol and 36% acetone by mass, a ratio of about 0.63. I use it only as a rough check that the theoretical figure is the right size. It is a European figure from 2016, not an Indian plant.

Because the reaction gives one mole of each, a plant on this route cannot make phenol without making acetone. The two then go to different customers. The same eco-profile says about 37% of global phenol goes into bisphenol A (BPA), with phenolic resins the second-largest use. Phenol is also a feedstock for caprolactam. Acetone goes mainly into solvents, methyl methacrylate and, again, BPA.

BPA is where the two meet: a tonne of it takes about 0.82 tonnes of phenol and 0.25 tonnes of acetone in theory (2 x 94.11 divided by 228.29, and 58.08 divided by 228.29). Real plants need more.

What 2026 showed

A feedstock shock is a clean test of the coupling, because it cuts both products at once. US and Israeli strikes on Iran began on 28 February, and on 2 March an Iranian commander declared the Strait of Hormuz closed. India then prioritised LPG for households. Hindustan Organic Chemicals (HOCL), whose Kochi site is its only phenol and acetone plant, told BSE that BPCL, its bulk LPG supplier, had discontinued supply after a Government of India decision that LPG from public sector companies go exclusively to domestic consumers.

HOCL shut its cumene plant on the evening of 11 March and its phenol plant on the afternoon of 14 March, under force majeure. Deepak Phenolics announced a suspension of its Dahej phenol and acetone plant from 3 to 15 April, citing feedstock shortages after its propylene suppliers declared force majeure. HOCL told BSE on 24 April that commercial production at its phenol and cumene plant had restarted that day.

The strait has not been steady since. A CGTN report of 12 July says Iran's Revolutionary Guard navy announced a new temporary closure that day. A timeline compiled from press reports (Wikipedia, read 25 October) records a US naval blockade reinstated on 14 July and the strait largely blocked through mid-September. I have not found a dated primary statement on its status in October, so I do not state one.

The customs record for the first half of 2026 shows both products rising, and acetone rising faster.

OBSERVED, customs-derived: import value divided by quantity, a CIF average across grades and contracts. It is not a market price. India figures are from UN Comtrade, which draws on the same Indian customs data as the government's Tradestat portal; the two agree to within 0.2% on volume for FY2025-26. EU-7 is Germany, the Netherlands, Belgium, Italy, Spain, France and Poland, importing from ten named origins only.

Origin-month rows under 20 tonnes are excluded. Latest month available is July 2026, so the data runs about two and a half months behind. The last row is our arithmetic on the three rows above it, using the theoretical input ratios (0.824 tonnes of phenol and 0.254 tonnes of acetone per tonne of BPA). It is not a market margin.

Why acetone moved more

The two products took the same supply hit and ended up in different places. My reading, which the customs data fits but does not prove, is that phenol's outlets were already soft, so buyers pushed back on higher phenol offers, while acetone had no such drag and went short faster. A producer in that position earns more on the acetone and less on the phenol, and the reported values follow.

There are other explanations the data cannot rule out. Origin mix changed (Saudi Arabia supplied far more phenol to the EU-7 in January to July 2026 than a year earlier). Customs values are averages across grades. And a value recorded in April or May reflects cargoes priced weeks before, so the sharp May jump in India partly shows earlier pricing arriving late.

The April restart was also not the end of the supply story. HOCL's phenol plant went off line again from 23 May for statutory testing of the BPCL LPG pipeline and maintenance, a shutdown the company first announced for ten days and on 1 June extended until further notice. It reopened for commercial production on 12 June.

On 22 June HOCL began shutdown activities again, citing product market constraints, and on 5 July it said it had begun activities to reopen the phenol and hydrogen peroxide plants. The letters I have read run to 5 July and give no output rates. I have seen nothing later, so I do not know how much the plant ran from July to October. The May to July customs figures sit on top of a domestic plant that was running only part of the time.

What a buyer should do with this

A phenol producer's cost is net of what it earns on the acetone. When acetone is short and dear, the producer's effective feedstock cost falls, which gives a buyer more room in a phenol negotiation. When acetone is long, the reverse holds. So read the acetone market before you accept a phenol increase, and ask a supplier what acetone credit sits inside the quote.

Buyers of BPA face both legs at once. Over 31 months of India's customs data (January 2024 to July 2026), BPA's average import value sat about USD 251 per tonne above the cost of its phenol and acetone content, valued at the same month's import values. The standard deviation was about USD 65 and the range about USD 26 to USD 444. That is DERIVED arithmetic on customs averages. It checks that the cost stack is internally consistent and says nothing about what any one contract pays.

The quarterly figures in the table show that gap narrowing in the shock. In India it was about USD 220 per tonne in the first quarter and about USD 110 in the second, roughly two standard deviations below the 31-month mean. In the EU-7 it went from about EUR 197 to about EUR -4, so BPA's average import value was close to the cost of its two inputs.

The 31-month back-test covers India only, so the EU-7 figures are quarterly arithmetic and nothing more. I have not yet read the monthly series for these two quarters, so I cannot say whether the narrowing was one month or all three.

This post is analysis of public records. It is not investment advice, and it is not advice to buy, sell or time a purchase of any commodity or share.

What would change my mind

• The ratio falls back while disruption continues. If acetone's value as a share of phenol's returns to around 0.7 in the August to October data while the strait is still disrupted, a supply explanation looks weak.
• The ratio gap disappears by origin. If the gap closes when I recompute it origin by origin, origin mix explains more than I have allowed.
• The grades are different. If the acetone and phenol cargoes in Q2 are different grades from those in Q1, the averages are comparing unlike things.
• The monthly BPA gap was a one-month dip. If the narrowing in the second quarter comes from a single month, I would not call it a shift.

I have not yet read the August to October customs releases, and the July re-closure falls inside that window, so this test can no longer separate the March shock from the July one cleanly.

What to watch

Three events could change India's picture. Haldia Petrochemicals' phenol and acetone complex in West Bengal was inaugurated on 14 October 2026, according to PTI (reported by ThePrint on 14 October) and GKToday (15 October). PTI gives its capacity as 3.45 lakh tonnes of phenol and 2.15 lakh tonnes of acetone a year. Hydrocarbon Engineering described the project in August as including India's first on-purpose propylene unit.

I found no company statement, and no report says when commercial production starts, so I treat the capacity as reported and not confirmed. India imported about 284,000 tonnes of phenol and 129,000 tonnes of acetone in FY2025-26 (April 2025 to March 2026, Comtrade and Tradestat). If the reported phenol capacity holds, it is larger than a full year of those imports.

The other two are anti-dumping cases, one on phenol and one on acetone. The first is the case on phenol. India's trade remedies directorate (DGTR) opened it on 19 March 2026 against the United States, Saudi Arabia, Singapore, South Africa, South Korea, Taiwan and Thailand. The period of investigation is 1 January to 31 December 2025.

The notice names Deepak Phenolics Limited and Hindustan Organic Chemicals Ltd as the applicants, the same two producers whose outages are described above. The notice states no completion date, and I do not forecast one. Thailand, Saudi Arabia, South Africa and South Korea alone supplied about 69% of India's phenol imports from January to July 2026, so a duty would reach most of the supply.

We cover the case in our phenol anti-dumping note. As of 25 October 2026 DGTR's case page shows no findings, and I found no anti-dumping duty on phenol in force. The Finance Ministry declined to impose a duty on Thai phenol on 28 April 2021, after DGTR's last phenol case. A buyer should not price a duty that does not exist.

The acetone case is the one that matters most for this post. DGTR opened it on the same day, 19 March 2026 (file 6/11/2026-DGTR), against Singapore, South Korea, Taiwan and Thailand. All four acetone origins are also named in the phenol case. The acetone case page lists no findings. Its newest item is dated 22 October 2026, an update to e-mail contact details.

Because the two products come out of one reactor, a duty on one would change the economics of the other, and the same buyers face both cases. I have not read the acetone notice, so I do not state its period of investigation, its applicants or its product scope.

Frequently asked questions

Related reading

• India's phenol anti-dumping case: the seven named origins against India's import record.

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Methodology and sources

Customs values are import value divided by net weight, a CIF average across grades, taken from UN Comtrade (India as reporter; phenol under HS 290711, plus acetone and bisphenol A) and Eurostat Comext (EU-7 importing from ten named origins). Rows under 20 tonnes per origin-month are dropped; the threshold has not been sensitivity-tested. Customs values are not assessed prices and not landed costs. Input ratios are theoretical. We use no assessed or agency prices. We make no claim that these figures are accurate against any market price; the back-test checks internal consistency only.

1. Euronews, Strait of Hormuz, 17 March 2026. euronews.com.
2. CGTN, Iran closes Strait of Hormuz, US launches third round of strikes, 12 July 2026. news.cgtn.com.
3. Wikipedia, 2026 Strait of Hormuz crisis (a timeline compiled from press reports), read 25 October 2026. en.wikipedia.org.
4. Hindustan Organic Chemicals Ltd, letters to BSE (scrip code 500449) dated 11 March, 14 March, 20 April, 24 April, 22 May, 1 June, 3 June, 12 June, 22 June and 5 July 2026. bseindia.com.
5. Ply Reporter, Deepak Phenolics suspension (secondary). plyreporter.com.
6. Ply Reporter, Deepak Phenolics restart report of 18 April (secondary). plyreporter.com.
7. DGTR, case page for anti-dumping investigation on phenol, file 6/12/2026-DGTR, read 25 October 2026. dgtr.gov.in.
8. Ministry of Finance, Office Memorandum F. No. 354/121/2020-TRU, 28 April 2021. dgtr.gov.in.
9. DGTR, case page for the anti-dumping investigation on acetone, file 6/11/2026-DGTR, read 25 October 2026. dgtr.gov.in.
10. DGTR, initiation notification on phenol, 19 March 2026. dgtr.gov.in.
11. Petrochemicals Europe, Phenol and Acetone Sector Group eco-profile and EPD, September 2016. petrochemistry.eu.
12. ThePrint, PTI report on the Haldia phenol plant, 14 October 2026 (secondary). theprint.in.
13. GKToday, Haldia inauguration, 15 October 2026 (secondary). gktoday.in.
14. Hydrocarbon Engineering, Haldia Petrochemicals set to inaugurate phenol and acetone facility, August 2026 (secondary). hydrocarbonengineering.com.
15. Government of India, Tradestat commodity-wise imports. tradestat.commerce.gov.in.
16. UN Comtrade. comtradeplus.un.org.
17. Eurostat, international trade in goods database (Comext). ec.europa.eu.