Changes of Styrene Industrial Chains
Price is one of the outcome indicators reflecting the changes in industry supply and demand. First of all, let's take a look at the change trend and linkages the price, profit, supply and demand of the upstream and downstream industrial chain of styrene in the past five years.
In the past five years, styrene prices as a whole showed a V-shaped trend, with the decline greater than the increase. The lowest price was RMB 6,077/mt in 2020. The price trend of upstream and downstream products and styrene was almost the same, but the price spread trend of styrene and upstream and downstream products appeared differentiation.
The price spread between styrene and upstream benzene gradually narrowed in the past five years, falling from RMB 4,261/mt in 2018 to RMB 1,124/mt in 2022.
The price spreads between styrene and downstream PS, ABS and EPS expanded first and then shrank. The price spread between ABS and styrene reached RMB 6,803/mt in 2020, higher than the annual average price of styrene in that year. In 2021, the price spread hit the five-year peak of RMB 8,247/mt, close to the annual average price of styrene in 2021. The price spread between EPS, PS and styrene were consistent, showing a trend of first expanding and then shrinking. The maximum value of price spread occurred in 2020.
The price spread between styrene and upstream products gradually narrowed, while the price spread between styrene and downstream products first expanded and then narrowed, resulting in the narrowing of the profits of styrene industry.
The transfer of industrial chain profits is the result of multiple factors such as cost, supply and demand. Now let's take a detailed look at the reasons for the changes in styrene profits.
In the past five years, the profit of styrene producers has declined year by year. In 2018, the profit value reached RMB 1,440/mt. In 2021, styrene producers began to lose money. From January to October 2022, the average annual profit from styrene production was RMB - 447/mt. It is the only product in the current industrial chain that has lost money. Let's look at the reasons behind this through several sets of data. First, the compound growth rate of styrene demand in the past five years was 6.07%, but the growth rate of styrene capacity reached 15.26%. Excluding the problem of limited output released by new projects in the second half of 2022, the compound growth rate of output in the past five years was also as high as 13.16%, and the growth rate of supply was significantly higher than the growth rate of demand, corresponding to the squeeze on the market share of imported goods. In the past five years, the import dependence rate of styrene has decreased by 19.70 percentage points, and in 2022, the import dependence rate will be only 6.74%.
In the future, especially when the new capacity of the industrial chain continues to accelerate, the pattern of the industrial chain may change again.
Let's use the compound growth rate of capacity as an indicator to intuitively feel it. In the past five years, styrene has taken the lead, with the compound growth rate of capacity reaching 15.26%. The upstream benzene has followed closely, with the compound growth rate of capacity reaching 11.34%. However, the capacity growth of downstream PS, ABS and EPS was slower.
Let's take a look at the next five years. Through our tracking of the newly launched projects of various products, we can see that the trend is completely different from the past five years. In the next five years, the compound growth rate of downstream capacity will take the lead. Downstream products, especially ABS and PS, will accelerate their capacity expansion. The compound growth rate of the two will reach 12.71% and 13.58% respectively in the next five years. The expansion of upstream benzene and styrene capacity will also continue, but the growth rate will be lower than that of downstream.
Finally, let's take a look at the current situation. 2022 witnessed intensive capacity release of the entire industrial chain. The capacity growth of each product this year is higher than the average level of the past five years and the next five years.
Let's look at the price trend of styrene in the next five years. In 2023, the price of styrene will show a downward trend, and the overall trend will be volatile. From 2024 to 2027, the overall price will fall first and then rise.
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