EPS Price Likely to Rise in Q3 while Fall in Q4 2022
In H1, 2022, China’s EPS price fluctuated upwards. First, the upstream styrene price showed an uptrend, giving support to the price from the cost side. Second, the international crude oil price and commodity market also gave certain support to the price. Third, the downstream demand recovery was under expectation, and the transportation was limited, so most buyers purchased on a need-to basis, leading to slow sales. In addition, most market participants controlled their stocks to avoid risks.
In H1, the EPS output was estimated at 1,628.2kt, down 12.02% Y-O-Y. Due to the underperformed demand recovery and declined profits, the overall EPS output declined.
In H1, the EPS import volume was estimated at 9kt, down 38.49% Y-O-Y. As the demand didn’t improve much in China’s domestic market, the imports declined.
In H1, the EPS demand underperformed. The downstream demand in East China and South China was mild, and was not strong during the demand peak season. From mid-May the demand entered a slack season. The demand from the northern plate market underperformed, and the recovery was slow. From June, with the northern Jiangsu, North China and Central China entering the farming season, downstream purchases were limited.
In H1, the EPS export volume was estimated at 140kt, up 72.72% Y-O-Y. As China’s domestic EPS demand was mediocre while the overseas demand improved, the exports increased.
In H1, the apparent profit of the EPS industry was around RMB 518/mt, down RMB 315/mt. The supply was temporarily tight in H1, so the profit was passable. The profit declined due to the limited downstream purchases and high prices.
It’s estimated that the EPS price will trend up first and then decrease in H2. The EPS downstream demand will enter a peak season in Q3, so the consumption may improve and the purchases will increase. Meanwhile, some newly added capacity will be put into production, so the supply will likely climb. Therefore, both the supply and demand are expected to rise in Q3, and the trading atmosphere will improve. The price may run at a high level if there’s some support from the cost side. In Q4, especially from November, the demand from the northern plate market will enter a slack season and then come to an end, so the demand will gradually decline. The EPS price may trend down if there’s no effective support from the cost side.
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