The Styrene Market Trend of 2017 Recurred in 2018

The 2017 market trend recurred in 2018. Due to the external bullish factors, the negotiation prices of styrene spot goods in Jiangsu Market jumped to RMB 11,140-11,150/mt after the Spring Festival holidays. However, the high price only lasted for one trading day, February 26, and then the market prices plunged. As of March 9, the negotiation price of spot goods fell to RMB 10,150-10,200/mt, slipping by near RMB 1,000/mt within 9 trading days.

SCI holds that the main reason for this downtrend was the imbalanced fundamentals and the lack of confidences from market participants. After the Spring Festival holidays, the anti-dumping policy was settled at last, but the Customs collection was not as expected. Additionally, there was a half year of time between the registration and preliminary determination of the policy. Market participants has long been prepared. Restrained by the anti-dumping policy, the supply of February and March resources was expected to be tight. Market participants were well aware that the inventory level at East China main ports was lower than that of previous years. China’s styrene capacity grew sharply recently, and domestic units has been running with high work load owing to the high profit since the Spring Festival holidays. The supply of domestic resources remained stable and sufficient. However, downstream demand could not recover synchronously.

Participants held different opinions for the current actions of continuous selling by one mainstream trader in East China market. Some reckoned that the purpose was to build position at a safe price and recover the circulation of goods at the same time. While others considered that the trader may be intended to circumvent systemic risks as the cost of consuming such a large amount of resources would be huge.

Players felt confused about further operation with prices reaching the current level. The majority of market participants is likely to remain on the sidelines.