In June, the domestic styrene price rebounded after the rise, and the overall fluctuation was great. The price within the month was running between 10,355 yuan and 11,530 yuan/ton, and the price at the end of the month was lower than the price at the beginning of the month. At the beginning of this month, crude oil continued to rise, coupled with the strong performance of aromatic hydrocarbons abroad, the price of pure benzene at home and abroad rose, the cost side of the styrene price support. In addition, due to the intensive maintenance of styrene large-scale equipment in June, China's output loss is great. Although the downstream demand is still depressed, the domestic loss combined with the continuous export loading of terminals and factories, the fundamentals of styrene are expected to shift from inventory accumulation to deinventory in June, and the market continues to pull up orders. However, the Federal Reserve interest rate hike and other macro negative news, crude oil led the decline of commodities, styrene also has a certain decline, but the styrene inventory of terminals and factories continued to decline, the spot market in late month forced short, delayed the decline of spot prices, resulting in a significantly stronger basis. At THE END OF THE MONTH, DUE TO EXPECTATIONS OF A SIGNIFICANT WEAKENING IN THE FUNDAMENTALS OF THE DISTANT MONTH, THE PRICE OF NARROW FINISHING STYRENE FELL FURTHER, BREAKING through THE ENTIRE June GAINS AND SHOWING signs of continuing to decline. However, the terminal and factory inventory fell to a low, resulting in tight spot supply, the bearish mentality slowed down, styrene prices after a small rebound finishing, at the same time the basis has a very obvious strengthening.
2. Inventory changes at ports in East China
As of June 27, 2022, Jiangsu styrene port sample inventory total: 59,500 tons, decreased by 60,300 tons compared with the previous period (20220620). Commodity inventory at 35,500 tons, a month-on-month decrease of 0.53 million tons. Main reasons: there is no import vessel at the dock, and the quantity of domestic trade vessel is limited. Continuous export shipment increases the level of delivery, resulting in a decrease in inventory. At present, the overall operating rate of styrene factories that can be shipped in China is still low, so domestic trade ships are not expected to increase significantly. Although the demand status of downstream factories has not recovered significantly, a small number of exports have been shipped recently. Therefore, it is expected that the short - term terminal inventory is stable and slightly down the possibility.
3. Downstream market review
3.1 EPS: In June, the domestic EPS market first up and then down. At the beginning of the month, crude oil was strong with strong performance of American aromatic hydrocarbons, and pure benzene strongly supported the price of styrene significantly higher, and the price of EPS followed the rise. However, in the off-season of terminal demand, the superposition profitability was not good, and the high price of EPS market was obviously conflicted, and the overall transaction atmosphere was weak. In the middle of this month, the US dollar's interest rate rise and continued interest rate rise depressed the market sentiment, crude oil and other large quantities were sharply retracted, EPS prices were sharply retracted, some terminal raw material inventories were low, replenishment was entered into the market when the cost side stopped falling for a short time, and the overall transaction was briefly improved. The demand is insufficient, the circulation speed of goods in the floor is slow, and the inventory pressure of some domestic EPS factories is difficult to be effectively relieved for a long time. Some factories reduce production, and the overall supply is reduced. The average price of ordinary materials in Jiangsu in June was 11695 yuan/ton, 3.69% higher than the average price in May, and the average price of fuel was 12595 yuan/ton, 3.55% higher than the average price in May.
3.2 PS: In June, China's PS market rose first and then fell, with a range of 40-540 yuan/ton. Raw material styrene staged an inverted "V" trend, driving PS prices up and then down, the overall cost logic. Industry profits continue to be in the red, demand is sluggish, enterprises have strong intention to cut production, and capacity utilization rate has further declined. Under the influence of industrial production reduction, the inventory has been destocked to a certain extent, but the destocking speed is relatively slow. Downstream demand off-season, market stage turnover is fair, the overall general. Change benzene because of ABS weakening influence, trend as a whole less than through benzene.The monthly average price of Yuyao GPPS is 11136 yuan/ton, +5.55%; Yuyao HIPS monthly average price 11,550 yuan/ton, -1.04%.
3.3 ABS.: At the beginning of this month, driven by the strong rise of styrene, ABS prices rose slightly, but the overall increase was 100-200 yuan/ton. The market prices began to decline from the middle to early ten days. As the terminal demand entered the off-season in June, market transactions decreased, enquiries were not much, and prices continued to decline. This month the decline in 800-1000 yuan/ton or so.
4. Future market outlook
The Federal Reserve is expected to raise interest rates in the second round. Although the crude oil supply and demand side is still strong, there is still room for adjustment. The price of pure benzene is relatively strong. In July, the styrene factory is expected to rise. The fundamentals of pure benzene are also strong, so the cost side will give styrene bottom support. Styrene itself is expected to weaken, most of the equipment to stop maintenance in June will resume production at the end of June and the first ten days of July, and Tianjin Dagu Phase II new equipment will also be put into production soon, so in July styrene domestic supply will have a significant increase; The downstream demand is still not optimistic. The inventory of finished products in the three downstream factories is on the high side, and the impact of limited new orders and insufficient production profits makes the probability of the three downstream to recover normal demand small. Export shipments will also decrease significantly in July. Therefore, THE overall FUNDAMENTALS are expected to weaken in July, and the bears may take the FED's interest rate hike as the basis, combined with the expectations of weak fundamentals, to drive down the price of styrene at the end of June and the beginning of July. At that time, styrene will show profit shrinkage and enter the market dominated by cost logic again.
Post time: Jun-06-2022