How Will the Styrene Market Fare in Mar & Apr?
It is expected that the supply and demand of styrene may both increase in March and April. In March, the increase in demand will be greater than that in supply, and the supply and demand fundamentals will improve significantly. In April, the demand growth may be slower than the supply growth, which may dampen the market price.
Relying on the synchronously rising prices and profits before the Spring Festival, the supply of styrene stayed a high level after the festival. However, the resumption of styrene downstream industries was slow after the festival, pushing up the inventory of styrene at the main ports in East China. With the continuous high crude oil price and the high inventory of benzene after the holiday, the price driver of styrene turned to the demand side.
The resumption of styrene downstream industries after the Spring Festival was slow.
Benzene and styrene, as upstream products of the styrene industry chain, were in stable production during the Spring Festival. However, compared with the same period last year, the operating rate of the styrene market after the Spring Festival this year was significantly lower than that before the Spring Festival.
The delayed resumption of styrene downstream industries after the Spring Festival in 2023 significantly weakened the supply and demand fundamentals of styrene in February, resulting in the continuous accumulation of styrene inventory at the main port.
There were many highlights in the terminal market after the holiday.
Household appliances and real estate industries are the main consumption areas of styrene, accounting for about half of the total consumption of styrene.
First of all, the operating rate of the polymeric MDI market after the Spring Festival in 2023 declined compared with that before the festival, which was contrary to the rising trend after the Spring Festival in 2022. The demand for polymeric MDI from refrigerators and freezers was weaker than that of the same period last year, which was in line with the Y-O-Y decline in the export volume of household appliances.
Secondly, the operating rate of the cement market after the Spring Festival in 2023 was significantly higher than that before the festival, which was consistent with the frequent issuance of incentive policies in the real estate industry since the end of 2022. According to the survey, real estate enterprises will usher in a wave of work resumption in March. In addition, the inventory of float glass continued to rise rapidly after the Spring Festival in 2023, which was different from the slow rise after the Spring Festival in 2022. However, cement is used in the early stage of real estate construction, while glass was used in the late stage of real estate construction. With the recovery of the real estate industry, float glass inventory is expected to gradually decline.
The resumption of work in the home appliance industry after the holiday was slow, so the demand for PS, EPS and ABS grew slowly, which further restricted the demand for styrene. However, the recovery trend of real estate industry is relatively obvious, driving the demand for EPS and PS in the field of building thermal insulation to increase. However, the exterior wall thermal insulation materials produced by EPS and PS are mostly used in the late stage of real estate construction, so it is difficult to act on the increase of the operating rate of EPS and PS industries in the short term, and it is also unable to support the demand for styrene in the short term.
Styrene supply-demand fundamentals may improve in March and April.
From the perspective of the supply side, according to the production progress of new units and the enterprise's maintenance plan for March and April, the supply of styrene is expected to gradually increase from the low point in February. At the same time, the demand for styrene in the downstream EPS, PS and ABS markets during March and April will also increase. On the whole, the demand growth of styrene in March may be faster than the supply growth, but the demand increment in April may be less than the supply increment, and the overall relationship between supply and demand may be strong first and then weak.
On the cost side, the crude oil price in March and April is likely to move down slightly, and the decline may gradually narrow. Meanwhile, the price of benzene may also move downward. For one thing, the increment of demand is limited, which may be less than expected. For another thing, the price increase driven by the demand for oil blending in Europe and the United States is likely to advance, so it is unlikely to boost the market in March and April.
On the whole, the cost side may put pressure on the styrene price, and the supply and demand relationship can not produce an upward driving force on the price of styrene. Therefore, the price of styrene may go range-bound in March and April, and the price center will move down slightly. At present, the profits of styrene and downstream products are meager, which provides support for the styrene price, so the downward space of styrene price is limited.
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