Styrene Prices May Fall After Rising in Dec
In November, the styrene price fluctuated notably, with an average price down by 0.37% MoM. The cost dragged down the styrene price while the styrene fundamentals supported the price. In December, the cost may shift to support the styrene price while the styrene fundamentals may be weakened. Overall, the styrene price in December may rise first and then fall.
In November, the styrene price registered a “W-shaped” trend. In H1 November, the styrene price dropped due to the weak cost. In mid-November, the price rise of cost and the continuous decline of the inventory at East China’s main port boosted the styrene price. The last two days of the paper contract settlement period saw a rapid price decline as market bulls liquidated positions. Supported by rising benzene prices, the last two days of November witnessed another price increase. The average Brent crude oil price in November fell by 2.63% MoM, with benzene price dropped by 2.41%. In November, the average price of styrene was RMB 8,841.9/mt, decreasing by 0.37% MoM. The strong fundamentals limited the styrene price to decline more than its cost.
In December, the price of the cost may be hard to further decline and slightly support the styrene price. However, the styrene supply may increase MoM due to the restart of some units. In addition, the increment of demand may be smaller. Overall, the fundamentals may put some pressure on styrene prices.
The price of styrene cost may be hard to further decline.
The crude oil price may go range-bound. On the macro side, the Federal Reserve is likely to continue its rate-cut policy in the short term, but the pace of future cuts is expected to slow down. Rising U.S. Treasury yields and a strong dollar may exert downward pressure on crude oil prices. However, fundamentally, the OPEC+ production cut is delayed to the end of Q1 2025, which supports the crude oil price. The accumulation of the U.S. crude oil stocks and the weakening of demand are both expected, which have a limited impact on crude oil prices.
On one hand, benzene prices may fall first and then rise. On the supply side, a high import volume is expected. The cold weather may cause the closure of the Yangtze River estuary, potentially driving benzene prices up. On the demand side, some styrene units may be restarted and the output of CPL, phenol, and adipic acid are expected to increase. In addition, the seasonal restocking demand ahead of spring may be passable. The benzene price may positively impact the styrene price and the styrene price may fluctuate at highs.
On the other hand, ethylene prices may fluctuate at high levels, continuing to support the styrene price. On the demand side, new downstream EVA and styrene units are scheduled to come online. In addition, the tight spot supply in ethylene is unlikely to change in the short term.
The ample supply and weak demand may drag down the styrene price.
On the supply side, the styrene supply may increase with the restart of some units. In December, the restart of styrene units will increase. The 300kt/a unit at Tangshan Risun Aromatic Hydrocarbon was restarted on November 28. The 1,800kt/a unit at Zhejiang Petroleum & Chemical was restarted on November 30. The 280kt/a unit at CNOOC Ningbo Daxie Petrochemical may be restarted in mid-December. The 450kt/a unit at Huatai Shengfu may be restarted in H2 December. It’s predicted that the styrene output in December may be 1,455.9kt, increased by 14.74% MoM and 11.09% YoY. The operating rate of the styrene industry may be 73.86%, up by 7.34% MoM. The first half of November is a period of unit recovery with limited port arrivals, which is unlikely to pressure prices downward in the short term. In H2 December, the restarted units and increased port arrivals may begin to exert pressure on styrene prices.
On the demand side, the demand may decline MoM, which supports styrene price limitedly. The output of EPS and SBR may decline MoM, while other downstream outputs are expected to increase. In December, the EPS output may decrease by 2.08% due to the continued decline in the demand from the northern construction insulation industry. Supported by orders from large home appliances both domestically and abroad, coupled with the tight supply of high-end material, ABS and PS industries are expected to see continued output increases. However, the demand from small and medium downstream sectors may weaken. In addition, the operating rate my hard to rise. The ABS output may increase by 3.13%, decreasing by 7.69% from November. PS output is expected to rise due to the restart of maintenance units and the commissioning of new units, with an increase of 5.15% MoM. Considering the overall output changes in the seven major downstream sectors, the demand for styrene is estimated to increase by 3.76% in December, a decrease of 1.07% from November.
In summary, the cost is unlikely to continue to drag down styrene prices. The fundamentals of styrene in H1 November are decent, providing some support for prices. However, as the expectation of increased supply materializes, the pressure on styrene prices may intensify. In December, it’s predicted that the styrene price may fluctuate between RMB 8,500-9,080/mt, with the average price slightly dropping to RMB 8,780/mt.
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