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No improvement in the demand side, styrene price rebound height is limited
2023/6/6
No bright spot on the demand side for now
Recently, styrene destocking has accelerated the price rebound, but the profitability of downstream enterprises is not satisfactory, and there is a possibility of reducing the load later, which has created some constraints on the rebound of styrene.
At present, styrene inventory to speed up the price rebound, with prices rising, profits were repaired, but the demand side did not pick up significantly, the price rebound height is limited.
Cost downward conduction is not good
Since mid-April, the impact of the international crude oil prices fell, domestic pure benzene prices fell, and cost collapse is an important reason for the decline in styrene prices. As of June 2, the domestic pure benzene spot price of 6,600 yuan / ton, down 900 yuan / ton compared with the high point on April 17, a decline of 12%. After the market, although the decline in pure benzene prices compressed production profits, but the current domestic pure benzene production profit is still close to 1,000 yuan / ton, the best profitability of the styrene industry chain in the field. Driven by the high profit, the domestic pure benzene start-up load is at a high level. Correspondingly, the downstream of pure benzene, except for aniline, other downstream business conditions are not good. Therefore, the cost of pure benzene is not well transmitted downward, and there is a possibility of further price decline.
However, there is also a certain uncertainty in the late trend of pure benzene. As international crude oil prices continue to fall, the willingness of industrial countries to support crude oil prices has risen significantly. 2022, OPEC+ will shrink crude oil production by 2 million barrels per day. On June 5, OPEC+ reached an agreement to extend its previous crude oil production cuts until the end of 2024. At the same time, Saudi Arabia said it would cut production by another 1 million barrels per day on top of its previous output. With OPEC+ again curtailing production to support crude oil prices, short-term crude oil price trend will show a strong pattern, including styrene and other chemical prices will be supported.
High inventory pressure will be lifted
After the Spring Festival, domestic styrene producers are in a loss-making situation, with the maximum loss reaching 300 yuan/ton at one point. Recently, styrene prices have bottomed out and production profits have been repaired. As of May 31, the average loss of domestic styrene producers was about 50 yuan/tonne, shrinking by 120 yuan/tonne compared to the previous week. Due to the overall poor business conditions, the domestic styrene start-up load this year is lower than the same period last year. 71.9% of the domestic styrene arithmetic average start-up load from January to May, down 4.07 percentage points from the same period last year. As of June 1, the domestic styrene start-up load was 67.5%, down 1.5 percentage points from the same period last year, and since mid-May, there has been a concentrated overhaul of domestic styrene plants, part of which is due to business conditions, and part of which is routine maintenance. Most of the above overhauled units will resume production in early July or even August, so domestic styrene supply will remain tight in June.
High inventories are an important reason for suppressing styrene prices. since mid-February, as the styrene start-up load continues to decline, the domestic styrene supply is tight and the pace of destocking is accelerating. As of May 29, domestic styrene social inventory was 133,500 tons, down 157,300 tons from mid-February, a decline of 54.09%. Among them, the inventory in East China is 97,000 tons, down 140,200 tons from mid-February, a decline of 59.11%; the inventory in South China is 36,500 tons, down 17,100 tons from mid-February, a decline of 31.90%. With declining inventories, domestic styrene inventories have basically returned to the level of the same period last year, and the suppression of styrene prices by high inventories is gradually lifted.
Downstream profitability is not good
The overall start-up load of styrene downstream has risen compared to the same period last year due to the still available orders in the early market. As of June 1, the start-up load of styrene downstream EPS, PS, ABS, SBR and UPR were 61.3%, 61.61%, 82.84%, 60.71% and 27% respectively, up 5.97 percentage points, up 7 percentage points, down 5.46 percentage points, up 4.51 percentage points and up 6 percentage points compared with the same period last year. However, it should be noted that, although the current styrene downstream start-up load overall better than the same period last year, but the profitability of downstream enterprises is not ideal. As of June 1, styrene three major downstream EPS profit 110 yuan / ton; PS average loss of 175 yuan / ton; ABS average loss of 300 yuan / ton, down from the previous period, but also slightly lower than the same period last year. At present, most of the styrene downstream companies have a certain inventory pressure, coupled with the poor profit situation, the possibility of reducing the load later, which has produced some constraints on the recent rebound of styrene.
Recently, styrene destocking has accelerated the price rebound, but the profitability of downstream enterprises is not satisfactory, and there is a possibility of reducing the load later, which has created some constraints on the rebound of styrene.
At present, styrene inventory to speed up the price rebound, with prices rising, profits were repaired, but the demand side did not pick up significantly, the price rebound height is limited.
Cost downward conduction is not good
Since mid-April, the impact of the international crude oil prices fell, domestic pure benzene prices fell, and cost collapse is an important reason for the decline in styrene prices. As of June 2, the domestic pure benzene spot price of 6,600 yuan / ton, down 900 yuan / ton compared with the high point on April 17, a decline of 12%. After the market, although the decline in pure benzene prices compressed production profits, but the current domestic pure benzene production profit is still close to 1,000 yuan / ton, the best profitability of the styrene industry chain in the field. Driven by the high profit, the domestic pure benzene start-up load is at a high level. Correspondingly, the downstream of pure benzene, except for aniline, other downstream business conditions are not good. Therefore, the cost of pure benzene is not well transmitted downward, and there is a possibility of further price decline.
However, there is also a certain uncertainty in the late trend of pure benzene. As international crude oil prices continue to fall, the willingness of industrial countries to support crude oil prices has risen significantly. 2022, OPEC+ will shrink crude oil production by 2 million barrels per day. On June 5, OPEC+ reached an agreement to extend its previous crude oil production cuts until the end of 2024. At the same time, Saudi Arabia said it would cut production by another 1 million barrels per day on top of its previous output. With OPEC+ again curtailing production to support crude oil prices, short-term crude oil price trend will show a strong pattern, including styrene and other chemical prices will be supported.
High inventory pressure will be lifted
After the Spring Festival, domestic styrene producers are in a loss-making situation, with the maximum loss reaching 300 yuan/ton at one point. Recently, styrene prices have bottomed out and production profits have been repaired. As of May 31, the average loss of domestic styrene producers was about 50 yuan/tonne, shrinking by 120 yuan/tonne compared to the previous week. Due to the overall poor business conditions, the domestic styrene start-up load this year is lower than the same period last year. 71.9% of the domestic styrene arithmetic average start-up load from January to May, down 4.07 percentage points from the same period last year. As of June 1, the domestic styrene start-up load was 67.5%, down 1.5 percentage points from the same period last year, and since mid-May, there has been a concentrated overhaul of domestic styrene plants, part of which is due to business conditions, and part of which is routine maintenance. Most of the above overhauled units will resume production in early July or even August, so domestic styrene supply will remain tight in June.
High inventories are an important reason for suppressing styrene prices. since mid-February, as the styrene start-up load continues to decline, the domestic styrene supply is tight and the pace of destocking is accelerating. As of May 29, domestic styrene social inventory was 133,500 tons, down 157,300 tons from mid-February, a decline of 54.09%. Among them, the inventory in East China is 97,000 tons, down 140,200 tons from mid-February, a decline of 59.11%; the inventory in South China is 36,500 tons, down 17,100 tons from mid-February, a decline of 31.90%. With declining inventories, domestic styrene inventories have basically returned to the level of the same period last year, and the suppression of styrene prices by high inventories is gradually lifted.
Downstream profitability is not good
The overall start-up load of styrene downstream has risen compared to the same period last year due to the still available orders in the early market. As of June 1, the start-up load of styrene downstream EPS, PS, ABS, SBR and UPR were 61.3%, 61.61%, 82.84%, 60.71% and 27% respectively, up 5.97 percentage points, up 7 percentage points, down 5.46 percentage points, up 4.51 percentage points and up 6 percentage points compared with the same period last year. However, it should be noted that, although the current styrene downstream start-up load overall better than the same period last year, but the profitability of downstream enterprises is not ideal. As of June 1, styrene three major downstream EPS profit 110 yuan / ton; PS average loss of 175 yuan / ton; ABS average loss of 300 yuan / ton, down from the previous period, but also slightly lower than the same period last year. At present, most of the styrene downstream companies have a certain inventory pressure, coupled with the poor profit situation, the possibility of reducing the load later, which has produced some constraints on the recent rebound of styrene.
To sum up, the profit repair and inventory to accelerate the rebound in styrene prices, but styrene upstream pure benzene weak pattern does not change, the demand side did not pick up, styrene price rebound height is limited.
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