Styrene Cross-Regional Arbitrage OpportUnities Remain in Dec
Although the price difference between Shandong and East China widened in November, sparking arbitrage activities, it was insufficient to cover the logistics costs.
In early November, thanks to continuous destocking in late October, Shandong styrene producers faced limited inventory pressure, which supported local prices and resulted in a smaller decline compared to East China. Consequently, the price gap between the two regions narrowed, closing the arbitrage window.
In mid-November, the unexpected reduction in operating rates and early maintenance of Sinochem Quanzhou’s unit raised concerns that some East China supply might flow to South China to fill the gap, further supporting price increases in East China. Meanwhile, demand in Shandong began to weaken. Key downstream EPS plants, such as Shandong Lanhua Chemical and Rizhao Gon Chemistry, experienced reduced operating rates or short shutdowns. In the ABS sector, Shandong Haijiang Chemical also halted operations in late November. Additionally, the restart of Anhui Jiaxi New Material Technology’s unit captured some market share in surrounding areas, making it difficult for Shandong styrene prices to keep up with the rise in East China. As a result, the price gap between the two regions started to widen.
In late November, as the price difference expanded to over RMB 170/mt, cross-regional arbitrage activities among traders increased. However, the gap still failed to cover the freight costs from Shandong plants to East China’s main ports. Low-priced Shandong supply was primarily absorbed locally or in nearby regions, with no Shandong truck shipments entering East China ports.
East China expected to outperform Shandong in December, with cross-regional arbitrage opportunities remaining.
First, continued destocking at East China’s main ports is expected to support the market. The 600kt/a unit at Lianyungang Petrochemical will begin production in mid-December, adding to market supply. On the demand side, Lianyungang Petrochemical’s PS plant will also restart simultaneously. While this may capture market share from other producers, overall operating rates in the region are expected to rise slightly. ABS and EPS plants are operating stably, with key downstream consumption showing incremental growth. Additionally, strong demand to cover short positions in December, coupled with limited liquidity of supply at East China’s main ports, may further support market strength. Overall, the East China market in December is likely to experience destocking, supporting a market environment where prices are prone to rise rather than fall. Against the backdrop of fluctuating crude oil and benzene prices, East China styrene prices are expected to trade in the range of RMB 6,600–6,800/mt, with an average of RMB 6,700/mt.
Second, increased supply and reduced demand in Shandong are expected to pressure prices. Operating units in Shandong are running stably, and the restart of Guoen Chemical (Dongming)’s 200kt/a unit, likely in mid-to-late December, may release additional supply. On the demand side, as temperatures drop, EPS operating rates may decline slightly. ABS and PS operating rates are expected to remain largely unchanged, with key downstream sectors maintaining rigid demand. Against the backdrop of rising supply and weakening demand, Shandong styrene prices may face downward pressure, with an expected trading range of RMB 6,400–6,650/mt and an average of RMB 6,520/mt.
Overall, East China is expected to see both supply and demand increase in December, but its main ports may still experience destocking, supporting a market where prices are prone to rise. In contrast, Shandong may face rising supply and weakening demand, making it difficult for prices to keep up with East China’s gains. The price gap between the two regions is likely to widen compared to November, maintaining opportunities for cross-regional arbitrage.
If the price difference expands to over RMB 200/mt, low-priced Shandong supply may flow into East China’s main ports. Otherwise, it will continue to be absorbed locally or in nearby markets.
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