In July, the styrene market reversed its downward trend in the first half of the year and rebounded after bottoming out. After breaking through the 8,000 yuan (ton price, the same below) mark, it continued to rise to the 8,200 yuan line, with a monthly increase of 15.29%. . People in the industry generally believe that based on signs of loosening in the fundamentals of tight supply and demand, the probability of the styrene market continuing to rise is low, and the strong support from the cost side may make it fluctuate at a high level in the short term.
The half-year decline ended in one fell swoop
In the first half of the year, the styrene market fluctuated and went down. According to the commodity market analysis system of SunSirs, the average price of styrene market opened at 8,000 yuan at the beginning of the year, and closed at 7,163.33 yuan on June 30, a drop of 10.46%. Entering July, the styrene market swept away the gloom and rebounded from the bottom, ushering in the first rising month of this year, ending the half-year decline with a monthly increase of 15.29%.
"The supply and demand structure has become significantly stronger than expected, coupled with the positive domestic macroeconomic expectations and the help of rising crude oil prices, the styrene market has rebounded continuously since the beginning of July." Zhou Jiao, an analyst at Zhuo Chuang Chemical, said that from mid-April to At the end of June, the price of styrene continued to drop. But in July, both supply and demand exceeded expectations, driving the market price to continue to rise.
First of all, the increase in styrene supply in July was less than expected. Due to the delay in the restart time of most shutdown maintenance devices, the increase in the month is lower than expected; at the same time, the demand for ethylbenzene for oil adjustment is strong. Since the benefit of ethyl benzene is better than that of styrene, some styrene manufacturers adjust their product structure to produce more ethyl benzene , leading to a decrease in styrene output.
At the same time, the demand side of styrene also exceeded expectations. One is that due to the high price of styrene in Europe, the export negotiations have increased; the other is that downstream acrylonitrile-butadiene-styrene (ABS) and polystyrene (PS) manufacturers have good pre-sales, and the operating rate in July remained at a high level . In particular, ABS achieved a price rebound ahead of styrene in early June. The strong market demand and the follow-up demand for stocking supported the continuous increase in the operating rate of the ABS industry.
In addition, domestic macroeconomic expectations are positive, and international crude oil prices fluctuate and rise, driving the pure benzene market to continue to rise. The strong support from the cost side also helps the styrene market to bottom out and rebound.
High cost support stalemate
As for the market outlook of styrene, in terms of cost, the pure benzene market will remain at a high level in the short term, and the cost support for styrene is still strong.
Pure benzene is the core raw material of styrene, accounting for 60%~70% of the production cost of styrene. In 2021, pure benzene will account for 62% of the variable cost of styrene raw materials in China. Styrene has a very strong guiding effect. The market trend of pure benzene and styrene in July also showed a strong correlation.
According to the commodity market analysis system of SunSirs, the price of pure benzene increased step by step in July. The price on July 1 was 6183 yuan, and the price on July 31 was 7265 yuan, an increase of 17.49% from the beginning of the month. In terms of corporate quotations, on July 31, Sinopec’s refining and chemical companies quoted 7,200 yuan, an increase of 1,000 yuan from the beginning of the month. Other companies such as HSBC Petrochemical quoted 7,200 yuan, an increase of 1,000 yuan from the beginning of the month; Weilian Chemical quoted 7,423 yuan, an increase of 1,250 yuan from the beginning of the month; Xinhai Petrochemical quoted 7,350 yuan, an increase of 1,150 yuan from the beginning of the month.
For the recent trend of the pure benzene market, the Jinlianchuang chemical team is expected to show a stalemate at a high level. It pointed out in the research report that due to the continuous increase in the external market of crude oil and pure benzene, the cost of imports has moved up, which has formed a certain support for the domestic market. At the same time, hydrogenated benzene, a substitute for pure benzene, has experienced a sharp rise in the price of raw material crude benzene, and the production costs of enterprises have increased significantly. Manufacturers have shipped at high prices, and the return of downstream demand has given support to the pure benzene market, and the market's resilience still exists.
But at the same time, after the external markets of crude oil and pure benzene have risen for several days, the risk of a high-level correction is also accumulating. Moreover, some downstream products continue to lose money, and there is resistance to high-priced raw materials. The pure benzene market continues to have limited upward space, and the short-term adjustment is mainly at high levels. Therefore, although the cost support given to the styrene market by raw material pure benzene is not as strong as in the previous period, it can still maintain a high level.
The supply and demand structure may weaken
As for the changes in the fundamentals of styrene supply and demand, Zhou Jiao and other industry insiders have judged that the supply and demand structure may weaken slightly in the short term, and the positive support for the continued upward trend of the market may weaken.
"First of all, the increase in supply of styrene is greater than the increase in demand." Zhou Jiao pointed out in the research report that the output of styrene in August is estimated to reach 1.4304 million tons, an increase of 9.68% from the estimate in July, while In August, the estimated growth of downstream expandable polystyrene (EPS), PS and ABS output was only 7.08%, 3.09% and 6.52% respectively.
From the analysis point of view, the end of July and the beginning of August is the period when the maintenance of styrene plants returns to concentration, and the superimposed new plants are put into production ahead of schedule, stimulated by the upward recovery of the industry's gross profit in July, and it is expected that the pressure on the growth of styrene supply will be great. Specifically, in August, Ningxia Baofeng’s 200,000 tons/year integrated unit and Zhejiang Petrochemical Phase II’s 600,000 tons/year integrated unit are scheduled to be put into operation in the first half of the year, and 630,000 tons/year of maintenance capacity will return as planned. In August, the domestic styrene maintenance loss is expected to be about 50,000 to 60,000 tons, a sharp drop from July.
In terms of terminal demand, although there is no obvious negative impact on the whole, due to the rebound in the prices of styrene and downstream products in July, some small and medium-sized terminal downstreams are more willing to stock up during the "Golden September and Silver October". The source of sales has increased, and the pace of new orders may slow down in the future.
Therefore, the supply and demand structure of styrene may weaken slightly in August, but based on the overall positive macroeconomic expectations and no obvious negative factors, the upward trend in the styrene market will weaken, but it will still remain high and volatile. (Li Dongling)
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