Jan Styrene Industry Chain Prices Moved Up
Overall, in January, the prices of items in the upstream and downstream sectors of the styrene industry chain moved upward. However, the growth in upstream benzene prices outpaced that of downstream products, shifting the industrial chain's profit to upstream products.
In January, prices across the industry chain increased, with higher benzene prices driving the overall upward trend. The price increase in various links is narrowing from upstream to downstream products. The profits of styrene and downstream industries continued to be compressed.
The overall upward trend of industrial chain prices in January was driven by cost, with upstream benzene experiencing the most significant price increase. On the one hand, downstream rigid demand and restocking demand increased prior to the Spring Festival. On the other hand, high prices in overseas markets limited China’s benzene imports, and the continued destocking of East China ports in the latter half of the month stimulated an accelerated rise in the East China market price.
However, as the end of the year approached, the demand from the terminal field decreased, and downstream prices couldn’t rise fast enough to keep up with the rapid rise in benzene prices. The operating rate of the three major downstream markets of styrene showed a downward trend, further exacerbating the loss situation in downstream industries.
From the perspective of monthly average price, benzene had the largest price increase, while ABS had the smallest price increase. The monthly average price of benzene in January increased by RMB 677/mt, with an M-O-M growth rate of 9.58%. Styrene prices saw a rise of only RMB 359/mt, with an M-O-M increase of 4.34%. The growth rate of downstream prices further declined, with ABS, PS, and EPS prices increasing by 0.25%, 1.39%, and 3.36% respectively. UPR prices dropped by 1.12% M-O-M, dragged down by a significant decrease in its demand. The downward transmission of costs is weak, but the shortage of supply in the upstream benzene market has prompted market prices to climb to a temporary high, and some businesses are concerned about the post-holiday season.
As the Spring Festival holiday approaches, the declining downstream demand and low inventory of benzene in East China ports stand in stark contrast. In the long and short game, the benzene market may briefly consolidate at a high level. Under the condition of lower downstream demand and high costs, the styrene, ABS, EPS, and PS businesses may face long-term losses. From the standpoint of the post-holiday market, the benzene price is expected to remain high due to low inventory at ports, which will have a cost-driving effect on downstream markets.
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