At present, the production enthusiasm of domestic styrene enterprises has not significantly decreased due to losses. However, the profitability of styrene downstream is not good, and enterprises mainly purchase for essential needs, and it is difficult for the demand side to improve significantly in the short term.

Currently, the production load of styrene is maintained at a high level, the phenomenon of inventory backlog is obvious, and the market supply is relatively sufficient. From the demand side, the operating conditions of downstream enterprises are not good, and the willingness to actively stock up is not strong. Due to the combined effect of the above two factors, although the current stage of styrene is in a state of tight balance between supply and demand, there is an expectation of deterioration, so the weak pattern is difficult to reverse in the short term.

High starting load, sufficient supply of styrene

Since the end of June, domestic spot prices of benzene and styrene have both begun to decline. As of September 3, the spot price of benzene has fallen by 6.75% compared to June 20, and the spot price of styrene has dropped by 13.76% compared to June 20. Due to the much larger decline in the spot price of styrene compared to the upstream benzene, the operating conditions of domestic styrene producers have deteriorated, transitioning from a profit of over 500 RMB per ton in late June to a loss of nearly 300 RMB per ton now, approaching the highest loss point of the year. However, due to production inertia, the production enthusiasm of domestic styrene enterprises has not significantly decreased despite the losses. As of August 28, the domestic styrene production load was 78.1%, only down by 2 percentage points compared to late June, up by 9.7 percentage points compared to the same period last year, and still at a relatively high level.

At present, the current weekly production of styrene in China is about 370,000 tons, and there is no plan for the styrene unit to resume production or shut down in the near future, only some units have reduced production, which has a relatively limited impact on the total domestic production. From a medium-term and long-term perspective, the current loss of styrene is intensifying, and if this state continues for a long time, the styrene industry will actively reduce production scale to adjust production benefits, and the downward resistance of styrene prices will be greater and greater.

Due to the increasing self-sufficiency of domestic styrene, its import volume has been on a declining trend. Data shows that from January to July, China imported a total of 1.288 million tons of styrene, a decrease of 40,700 tons compared to the same period last year, representing a year-on-year decrease of 24.01%. However, the recent port arrivals have been relatively concentrated, resulting in a significantly higher inventory than the same period last year. As of August 25th, the Jiangsu styrene port sample inventory reached 179,000 tons, an increase of 17,500 tons compared to the previous week, a rise of 10.84% on a month-on-month basis; an increase of 137,500 tons compared to the same period last year, a rise of 331.33% on a year-on-year basis, and the port styrene faces significant inventory reduction pressure. During the same period, the commercial inventory of styrene was 84,000 tons, an increase of 7,500 tons compared to the previous week, a rise of 9.80% on a month-on-month basis.

Poor profitability, downstream demand has hidden dangers.

At present, the demand for styrene is mainly driven by essential needs, and the overall situation is relatively stable. As of August 28, the operating load of downstream EPS, PS, ABS, butadiene rubber, and UPR of styrene was 58.35%, 59.9%, 70.8%, 67.04%, and 34%, respectively, compared to the same period last year, an increase of 4.27 percentage points, an increase of 7.1 percentage points, an increase of 8.52 percentage points, an increase of 8.69 percentage points, and a decrease of 3 percentage points, respectively.

However, the current operating conditions of downstream enterprises in the styrene industry are not ideal. Among them, the profit per ton of EPS production is 100 RMB, which has narrowed compared to June-July; the profit per ton of PS production is 30 RMB, turning from a loss in June-July to a profit; ABS is losing 55 RMB per ton, and the loss has intensified compared to June-July. Overall, the profitability of the styrene downstream industry is not good, and enterprises purchase mainly for essential needs, and the demand side is difficult to improve significantly in the short term.

To sum up, the current domestic styrene market is in a state of thin profit and loss, and there is no obvious contradiction in the supply and demand pattern. On the one hand, although the loss has expanded, the styrene production load still maintains a high level, the port inventory is seriously backlog, and the market is under pressure to reduce inventory, and the supply pressure is difficult to relieve in the short term; on the other hand, the operating conditions of the three major downstreams of styrene are all close to the break-even point, although they have not yet reached the point where they force downstream enterprises to reduce load, the downstream enterprises are not strong in the willingness to stock up, and there is no obvious improvement in demand. Based on the above judgment, the overall weak pattern of styrene is difficult to reverse in the short term, and the industry needs to reduce load to alleviate supply pressure.

As an integrated internet platform providing benchmark prices; On September 9th, the benchmark price of styrene by SunSirs was 7,400.00 RMB per ton, a decrease of 1.99% compared with the beginning of this month (7,550.00 RMB per ton).

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