In May, the domestic styrene price fluctuated upward, and the price within the month was running between 9715-10570 yuan/ton. In this month, styrene returned to the situation driven by crude oil and cost. The volatile rise of crude oil price, coupled with the continuous and stable high price of pure benzene, effectively supported the rise of styrene price at the cost end. However, the performance of supply and demand fundamentals can hardly support the styrene price and play a role in suppressing the styrene price on the way up. After the May Day holiday, although the downstream demand gradually recovered, it was still lukewarm. Under the pressure of high cost, the downstream products also showed obvious profit compression, which led to the production reduction of some PS factories. On the supply side, under the influence of profit suppression and maintenance, the overall capacity utilization rate of styrene factories is 72.03%, which greatly reduces the supply. On the supply and demand side, it is difficult to maintain low and stable styrene stocks at terminals and factories without continuous export loading to share the supply pressure. Wanhua and Sinochem Quanzhou two sets of large-scale equipment have production problems in late October, which played a strong support for styrene prices. At the end of the month, styrene rose strongly and profits were repaired synchronously.
2. Inventory changes at ports in East China
As of May 30, 2022, Jiangsu styrene port sample inventory total: 9700 tons, down 22,200 tons from the previous period (20220425). Main reasons: with the gradual release of domestic styrene production capacity, the reduction of styrene import volume, combined with the delay of some goods, etc., led to the decrease in the quantity of arriving at the port. Although there was a decrease in the downstream production within this month, the demand for steel consumption was relatively stable, the pick-up was greater than the supplement, and the port inventory decreased. According to the data, the total sample inventory of Jiangsu styrene port is not high, which is lower than the median level in the past five years. However, the proportion of commodity inventory in the inventory is still relatively high. As the domestic spot demand is low, styrene market supply of goods is abundant.
3. Downstream market review
3.1, EPS: May domestic EPS market consolidation rose. Crude oil high shock, pure benzene strong support styrene price slightly higher, EPS price with a small rise. EPS price rose, but affected by the epidemic at the beginning of the month, logistics constraints in some regions were obvious, coupled with the low demand season, some domestic terminal buying cautious, high price conflict, downstream just need to buy, overall transaction ring, decreased year-on-year, some EPS factory inventory pressure is obvious, the overall supply is expected to reduce. The average price of ordinary materials in Jiangsu in May was 11260 yuan/ton, up 2.59% compared with the average price in April, and the average price of fuel was 12160 yuan/ton, up 2.39% compared with the average price in April.
3.2, PS: In May, the PS market in China was mixed, with ordinary permeable benzene rising at the end of the month, and high-end materials and modified benzene falling by 40-540 yuan/ton. Styrene in the month after high shock higher, cost support is strong. Capacity utilisation continued to fall under pressure from industry profit losses, weak demand and high finished goods inventories. The epidemic is still obviously inhibiting the demand side, and the small and medium downstream are cautious about the high purchasing sentiment, and the rigid demand is the main one. Benzene new capacity release and ABS fall drag, high-end material and benzene performance is poor. Common benzophene-permeable yield more, slightly better performance. The monthly average price of Yuyao GPPS is 10550 yuan/ton, +0.96%; Yuyao HIPS monthly average price 11671 yuan/ton, -2.72%.
3.3, ABS: In May, prices in the domestic ABS market fell across the board, the epidemic in Shanghai continued to shut down the city, and the recovery of terminal demand was slow. May gradually entered the low purchasing season for home appliances. Influenced by the outflow of orders for terminal home appliances in 22 years, the market purchasing desire decreased, the overall transaction was weak, and the large orders were mostly traded among traders. Near the end of the month, although the market transaction slightly improved, but the main part of traders at the end of the month to cover the short, the actual terminal demand has not really started.
4. Future market outlook
The direction of crude oil price is not clear in the near future. In view of the current high consolidation, there is a large possibility of correction. In June, there are more maintenance of domestic styrene equipment, which is favorable for the performance of empty pure benzene under the weakening demand for pure benzene. In addition, as more styrene plants are overhauled, production margins and valuations may be repaired, and there is a chance that supply and demand fundamentals will become the dominant factor. In June, the production of styrene in China will be significantly reduced due to the overhaul of several large factories and the change of catalysts. However, the probability of full recovery of downstream demand is also relatively low under the influence of the epidemic. In addition, the export shipment volume will also be significantly reduced after June, so the fundamentals of supply and demand of styrene are still worrying. On the whole, it is expected that the domestic styrene price in June is likely to be weak, and the downward space still needs to pay attention to the changes in the cost end. The price in Jiangsu is estimated to be between 9500-10100 yuan/ton.
Post time: May-29-2022