PS/EPS/ABS: Industry Chain Profits Will Improve Continuously
Styrene capacity expanded rapidly, accelerating the industry chain profits to transfer
As can be seen from the above chart, the styrene profits decreased from RMB 1,422/mt in 2018 to RMB -193/mt from January to July in 2020. However, the gross profits in PS, EPS and ABS industries increased continuously from 2016, and the gross profits surged to RMB 1,761/mt, RMB 1,625/mt and RMB 2,928/mt respectively from January to July in 2020.
As can be seen from the below table, from 2015 to 2019, the total capacity in the styrene industry kept positive growth, but the import independence decreased obviously, which meant that newly added capacity was released. However, from 2020, there was much newly added styrene capacity, dragging down the prices quickly, and this provided ultra-low feedstock for PS/ABS/EPS. Although end producers of PS/ABS/EPS suffered huge public health event impact in 2020, the domestic demand and export recovered gradually. The PS/ABS/EPS was even stockout, giving strong support to the prices. Thus, the price spread between styrene and PS/ABS/EPS enlarged gradually.
According to SCI, the newly added capacity of styrene totaled 14,850kt/a, but the newly added capacity of PS/ABS/EPS only totaled 8,320kt/a. The notable supply-demand imbalance of styrene will lead to low prices of it. For PS/ABS/EPS, the high gross profits in PS/ABS/EPS industries will continue if the low cost goes on and end demand keeps growing.
Profits at Agents Went ups and downs
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