Styrene Supply and Demand Balance Will Weaken in Apr
In March, China’s styrene supply decreased owing to intensive maintenance at home and abroad, while the overall demand picked up compared with that in February. Therefore, the supply and demand balance improved from last month. In April, China’s domestic styrene supply is predicted to increase, and the imports and exports will change little. Thus, the supply and demand balance in April will weaken on a month-on-month comparison.
China’s styrene output is expected to rise M-O-M, as the overhauled units will be restarted on after one, and the maintenance of units under planning decreases.
Market participants need to notice that some enterprises will continue to reduce production due to unsmooth logistics, or shut units down on account of thin profits.
In the second quarter of 2022, a total of 1,150kt/a of styrene unit will be put into operation. Tianjin Bohua Petrochemical’s unit will come online in April, but the supply increment will be seen in May. Zibo Junchen New Material Technology and CITIC Duoan Chemical Group’s styrene output is expected to be added in the third quarter.
Styrene downstream demand is expected to recover slowly.
From the table we can see that some downstream units have been put into operation in the first quarter. Both EPS and PS industry will usher in new capacity in April, which will bring an increment to the downstream supply. SCI holds the attitude that the end demand will continue to recover M-O-M, but the unsmooth logistics may put a damper on the overall demand somewhat.
According to the customs data from January to February, exports were less than expected, which was related to customs declaration. At present, according to incomplete statistics of SCI in March, there are about 60kt of export ships, and 30kt of ships will continue to be sent before the end of the month. But near the end of the month, the actual ships which are sent may be inconsistent with the statistics of the Customs at that time. At present, the logistics transportation has little impact on the factory's shipping temporarily. Therefore, if the export in April is mainly sent from the factory, it may be carried out smoothly. At present, the export increment in April is no larger than that in March.
In conclusion, although the supply and demand balance is expected to weaken in April, it is not only due to the significant increase in supply. We still need to pay attention to the elasticity of demand recovery. At the same time, the news of the international situation continues, and the international oil price fluctuates widely. Styrene prices have been fluctuating at a high level since the Spring Festival. Therefore, the cost is still a point that can not be ignored. The crude oil price may continue to hover at a high level, giving styrene bottom support. Styrene prices are expected to rise in the future, but it needs to be coordinated in many aspects.
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