Since the second half of the year, China's styrene market has fluctuated down from the previous high, and the price fell to 8812.5 yuan (ton price, the same below) on August 18. A month and a half time decline of 4.9%, the amplitude of 9.1%. Industry insiders believe that in the context of the peak season of demand, superimposed maintenance will lose some capacity, and the styrene market is expected to break through the current decline and build the bottom up.

downstream demand season

"in the third quarter is chemical plate demand by the off-season gradually transition to the key node of the season." Guotai Junan futures senior researcher Huang Liunan believes that from the perspective of the demand side of styrene, the recent demand has released a good signal.

The downstream demand for styrene is relatively dispersed, and the end products are mainly plastic products and synthetic rubber, with expanded polystyrene (EPS), polystyrene (PS) and acrylonitrile. Butadiene — Styrene copolymer (ABS) is the main, and the comprehensive consumption accounts for more than 70%. According to Jin Lianchuang analyst Cui Jing, from the three main downstream point of view of styrene, in recent weeks, the total inventory of enterprises fluctuated up and down 200,000 tons, and some downstream supplies even continued to be tight. From the perspective of the profit trend of downstream enterprises, it has also been maintained at a relatively reasonable level in the near future, and the acceptance of styrene is acceptable. Coupled with the "gold nine silver ten" consumption season is coming, under the promotion of business promotions, home appliances, automobiles and other terminal consumption areas or will usher in a peak, and the demand is transmitted to styrene to form an upward momentum.

At present, EPS ton profit is about 725 yuan, maintained at a high level, attracting some enterprises to increase the load, EPS industry operating rate of 61.18%, a quarter-on-quarter increase of 1.29%; PS profit is also maintained at a high level, in a profitable state; ABS ton profit was maintained at more than 5000 yuan, which was the most profitable product in the three downstream styrene. Enterprises had high production enthusiasm, and the operating rate was 94.14%, up 0.12% from the previous quarter.

In addition, before the end of the year, the three main downstream also have new capacity to join. In terms of EPS, Dalian Jiasheng 120,000 tons/year, Jiangsu Daluwang 240,000 tons/year, Jianlong Qingdao 200,000 tons/year, Jianlong Ningbo 200,000 tons/year and other new devices have been put into production news; In terms of PS, Shandong Yuhuang 200,000 tons/year, Shandong Doer 200,000 tons/year, Shandong Lanhua 100,000 tons/year, Ningbo Liwan 400,000 tons/year, Huizhou Renxin 180,000 tons/year, Zhejiang Yizu 400,000 tons/year, Qingdao Bay 200,000 tons/year and other devices also have production plans; In terms of ABS, Zhangzhou Qimei Phase 1 450,000 tons/year plant is planned to be put into operation in September. After the new production capacity is landed, it will form support for the styrene market from the demand side.

Capacity expansion is less than expected

In the second half of the year, styrene has a large number of new capacity landing, which is also the main reason for the low market sentiment in the early period." Taking into account the negative capacity expansion of new equipment such as Gulei petrochemical has been digested in advance, coupled with the maintenance of equipment in August is still too much, should be wary of excessive pessimism caused by the stage of supply and demand mismatch." Huang Liunan tips.

More new production capacity of styrene this year, in addition to Gulei petrochemical 600,000 tons/year device, There are 120,000 tons/year Luoyang Petrochemical, Tianjin Dagu 450,000 tons/year, Shandong Lianyi 720,000 tons/year, Wanhua Chemical 650,000 tons/year, CITIC Guoan Ruihua 200,000 tons/year, Zhejiang Petrochemical phase II 600,000 tons/year and Zhenhai refining and chemical 600,000 tons/year and other new devices have production plans.

Huang Liunan believes that in the long run, the expansion of styrene production capacity is really amazing, but this year in addition to the Gulei petrochemical that has been put into production, the probability of most of the devices being put into production before November is not large, and even some production capacity is likely to be delayed until next year. At present, the downstream raw materials and finished product inventory of styrene are low, and the outbreak of styrene prices will be strong after the peak season demand is cashing.

Cui Jing also believes that the overall supply pressure of styrene in August is not large. From the perspective of China's supply situation, the parking and maintenance of styrene devices are more concentrated, such as Anhui Jiaxi 350,000 tons/year device parking and maintenance for 20 days, Qilu Petrochemical 200,000 tons/year device parking and maintenance for 45 days, Jiangsu Xinyang 300,000 tons/year device parking and maintenance for about 25 days, which to a large extent hedge the new supply brought by Gulei petrochemical production.

And from the import point of view, the overall supply of the outer disk is not sufficient, and the inner and outer disk most of the time to maintain the upside down situation, although the short-term import has a certain rebound, but the increment is more limited, still maintained in the relatively low range.

Cost end support is still available

From the cost point of view, the probability of a sharp fall in crude oil is not large, in the case of pure benzene prices have not fallen deeply, styrene market trend or will be mainly dominated by changes in supply and demand.

From the crude oil point of view, the recent Delta virus led to the global epidemic repeatedly, the demand performance is flat, the international crude oil prices are also sharply lower. But there was still some positive news on the inventory front, with U.S. crude oil inventories falling to their lowest level since January 2020 and total U.S. oil product inventories, including those in the Strategic Petroleum Reserve (SPR), falling to near the lower end of the five-year average. Although the pace of economic recovery is not as good as expected, it is still in a sustained recovery, and the probability of a sharp fall in oil prices is unlikely.

Pure benzene, with the restart of some downstream devices, the market demand is expected to gradually increase. In the short term, the pure benzene market interval is mainly organized, and the rise and fall space are limited. At present, the pure benzene market negotiation atmosphere is ok, some contracts have replenishment trend.

Overall, in the case of no significant collapse of cost support, the styrene market trend will be guided by supply and demand, in the recent supply reduction due to maintenance and downstream demand to good fundamentals, the market may build a bottom upward.