Styrene continues its decline

Cost support is weakened, and new devices are expected to be put into production. The supply and demand pattern of styrene is expected to change from tight balance to oversupply in the later period, and the trend of falling prices from high prices will continue.

Cost support weakened

In the second quarter of last year, styrene futures prices went out of unilateral rise after bottoming out. The most direct reason for the price increase of styrene is the rising cost caused by imported inflation. At present, the supporting effect of cost on styrene is weakened.

The easing of the epidemic in India, the loosening of control measures in Europe, and the arrival of the summer travel peak are expected to increase the demand for crude oil. In contrast to supply, there is still a gap in global supply. OPEC may announce a gradual increase in production at its meeting next week; negotiations on the Iranian nuclear issue resume, and Iranian crude oil is expected to flow back into the market in the future. In this case, crude oil prices will continue to oscillate in the short term.

In terms of pure benzene, problems such as the centralized maintenance of domestic and foreign installations in the early stage have caused a shortage of pure benzene supply, and port stocks are at an extremely low level. Since mid-to-late May, overhaul devices have resumed production one after another, and the starting load of domestic pure benzene plants has recovered to 85.3%, and will continue to increase in the future. It can be predicted that the supply of pure benzene will gradually be abundant in the later period.

The supply of goods is gradually increasing

The continuous increase in the price of styrene in the early stage has stimulated the production enthusiasm of enterprises, and the maintenance of some planned maintenance devices has been postponed. Up to now, the domestic styrene plant's start-up load is 86.7%, which is at a relatively high level. In the later period, there are still some maintenance devices planned to resume production. In addition to the increase in the starting load of stock capacity, styrene also has the problem of incremental capacity deployment. Ningbo Huatai Shengfu’s 450,000-ton/year plant was put into operation in May, and Gulei Petrochemical’s 600,000-ton/year plant is scheduled to be put into operation at the end of June. In addition, there are 4 sets of 1.69 million tons/year plant under the plan. Put into production half a year.

After the Spring Festival, the supply of styrene was tight and the market entered the destocking stage. As of May 24, styrene inventory at East China ports was 33,600 tons, a year-on-year decrease of 90.30%; South China ports styrene inventory was 11,100 tons, a year-on-year decrease of 72.93%. At the same time, the inventory of styrene plants was 119,200 tons, a year-on-year decrease of 39.24%. Low inventory has played a supporting role in the price of styrene, but with the change in the supply and demand pattern of styrene, the inventory of styrene plants has shown an upward trend, and it is likely to enter the stage of accumulation in the later period.

Hidden dangers in downstream demand

At present, styrene downstream companies have good profits and high production enthusiasm, especially ABS, with a production profit of 5,600 CNY/ton, and the entire industry chain is in a healthy state. As of May 27, the domestic polystyrene plant's operating load was 68.66%, down 5.63 percentage points from the same period last year; the EPS device's operating load was 65.38%, down 0.59 percentage points from the same period last year; the ABS device's operating load was 99.80%, compared with the same period last year. The same period last year increased by 2.25 percentage points; UPR device operating load was 42%, an increase of 2 percentage points over the same period last year; SBR plant operating load was 71.58%, an increase of 9.05 percentage points over the same period last year.

Except for the decline in the start-up load of the polystyrene plant, the start-up load of other downstream styrene plants was basically the same or even increased compared with the same period last year. However, as the price of styrene has fallen from a high level, under the influence of the mentality of buying up and not buying down, the enthusiasm of downstream stocking has cooled, mostly focusing on fulfilling existing procurement contracts. In addition, it is difficult for the terminal market to transmit high costs downward, and there are hidden dangers in the downstream demand for styrene in the later stage.

The supply of pure benzene recovers, and the price may fall, and its supporting role for styrene weakens. The start-up load of the styrene plant has risen, coupled with the successive launch of new capacity, the market supply has increased accordingly. The operating load of downstream enterprises is at a high level, but the poor terminal demand and the reduced willingness of enterprises to stock up make the demand hidden. Under the combined effect of the above factors, the supply and demand pattern of the styrene market will change, and it will gradually enter the stage of accumulation in the later period, and the price will therefore be under pressure.