Styrene Industry Chain Profits Anticipated to Shift Upstream
Styrene supply has grown significantly faster than demand over the past two years as a result of the expedited production of new styrene units and weak terminal demand. This is the primary cause of the ongoing decline in profits of styrene and upstream and downstream markets. Styrene and its upstream and downstream markets will continue to see new capacity over the next five years. The growth of downstream capacity will peak between 2023 and 2024, but there won’t be enough benzene capacity being put into operation to offset this. Profits from the industrial chain are predicted to move upstream in the future.
In 2023, the cumulative average theoretical profit of the industrial chain decreased by 130.45% Y-O-Y.
Starting in 2022, the profits of styrene and its upstream and downstream industries have significantly shrunk. Since 2023, the theoretical profits of styrene, PS, ABS and other products have continued to suffer losses. From the cumulative profit value of each product in the industrial chain, the average theoretical profit of benzene, styrene, and PS, EPS and ABS from January to May 2023 was RMB -492/mt, a decrease of 130.45% compared to the average theoretical profit of RMB 1,616/mt in 2022.
Downstream ABS and PS will lead the commissioning of new capacity in the next five years.
In the past five years, styrene has led the commissioning of new capacity in the industrial chain, followed closely by benzene, while the PS, EPS and ABS capacity growth has lagged behind both. The compound growth rate of styrene capacity from 2018 to 2022 was 14.42%, that of benzene capacity was 11.34%, and that of PS, EPS and ABS capacity was less than 10%.
From upstream to downstream, new capacity commissioning will intensify over the course of the next five years, with ABS and PS taking the lead in this regard. The capacity of ABS and PS is anticipated to rise at a compound growth rate of 19.43% and 16.14%, respectively, from 2023 to 2027, whereas styrene capacity will grow at a rate of about 9.12% and benzene capacity at only 4.35%. The largest annual capacity growth rates in recent years are anticipated for ABS and PS in 2023, at 60% and 47%, respectively.
Industry chain profits may shift upstream in the future.
In the next five years, the demand for benzene by the new styrene capacity will outpace the output of new benzene units. Similarly, the consumption of styrene by the new capacity of PS, EPS, and ABS will outpace the supply of new styrene units. ((Less than 50% of benzene is used as styrene). As a result, the supply and demand structure of benzene in the future may be stronger than that of styrene.
Additionally, because PS, EPS, and ABS manufacturing lines will be put into operation one at a time, the actual demand for styrene may not increase as much as anticipated. Consequently, the supply and demand structure of styrene may be weaker than that of PS, EPS, and ABS. Overall, the profits of the industrial chain are expected to shift upstream.
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