Will Volatile Styrene Market Return?
In H1, 2020, China styrene market prices fluctuated by as high as 43%, affected by the start of Hengli Petrochemical and ZPC coupled with the public health event.
Entering June, the styrene market fluctuated within 10%.
Price:
The prices of all products in the styrene industry chain went down, and styrene suffered the largest decline. From January to August, styrene prices decreased by 33% on a year-on-year basis amid weak supply-demand fundamentals. By comparison, EPS, PS and ABS prices only slid by 18%, 19% and 7% respectively.
ABS prices in January-June, January-July, January-August slid by 11%, 9% and 7% respectively. The gains in the prices were mainly driven by the tight supply and strong demand. By comparison, EPS and PS sectors underperformed.
The margins moved downward in the styrene industry chain in 2020. Smaller declines in PS, ABS and EPS prices, compared with feedstock styrene, helped buoy their margins.
Supply:
From January to August, only the supply of ethylene declined year-on-year among all the products in the styrene industry chain. The decline in January-June, January-July and January-August was 4%, 3% and 2% respectively. This was mainly caused by intensive turnarounds of ethylene unit in 2020.
The supply of benzene and styrene in January-August rose by 8% and 11% respectively year-on-year, in the wake of newly added units and consecutive rises in the port inventory. As of end-August, benzene and styrene port inventory rose by as high as 100% and 208% year-on-year, mainly caused by the public health event and commissioning of new units.
The supply of EPS and PS steadily increased in January-August. By comparison, the supply of ABS was range-bound, which were mainly driven by demand. EPS and PS supply rose by 10% and 1% Y-O-Y, and ABS supply was largely stable, much lower than the 10% supply in styrene.
Conclusion:
The styrene market is slowing its fluctuating pace now, and prices are hovering at the costs. In addition, Q4 will likely see intensive release of newly added capacity, indicating increasing supply pressure. Therefore, the styrene market will be not so volatile then.
