High cost and low inventory trigger a rebound in styrene prices
2023/9/15
Recently, due to supply and demand factors such as rising crude oil prices and increasing downstream orders, styrene, a relatively niche variety, has experienced a "big market". Since the end of August, the mainstream spot prices in East China have increased by over 15%, attracting market attention.
Recently, the fundamentals of styrene have been relatively strong, and the resilience of downstream demand has been better than expected, driving port destocking. In addition, energy prices are strong. The combined effect of the two factors has led to an upward trend in styrene prices. However, the market has some expectations for this round of market trends. "said Lu Anqi, an analyst at Zijin Tianfeng Futures.
Constrained by the reduction of production and price protection in major producing countries, crude oil supply has tightened. In early July, Saudi Arabia announced a voluntary reduction of 1 million barrels per day until the end of the year, while Russia followed Saudi Arabia's footsteps and announced a voluntary reduction of 300000 barrels per day in exports until the end of the year. OPEC has maintained its previous production reduction measures of 3.66 million barrels per day. At the same time, global refinery comprehensive profits are at a high level in the same period in five years, with a high acceptance of rising oil prices. Brent crude oil prices have risen from $74.56 per barrel in early July It has risen to a recent level of 92.3 US dollars per barrel, with an increase of 23.79% In the view of Wu Gang, a senior analyst at China Investment Anxin Futures, the cost side provides strong support for the rise in styrene prices.
It is understood that the low inventory of styrene at ports is the main manifestation of the current tight spot liquidity. The latest data shows that the inventory of styrene ports is 36500 tons, a year-on-year decrease of 19% and a month on month decrease of 11%. The continuous destocking of ports has resulted in current inventory being at the lowest level in the year or even in history.
The operating rate and production of styrene market are mainly in a narrow range, and the supply increment is concentrated in the enterprise end, but it is not enough to change the tight supply situation in the market. In addition, in the environment of rising prices, traders have a strong reluctance to sell, which is also one of the factors for tight spot circulation. "said Dai Yifan, an analyst at Nanhua Futures Energy Chemical.
Driven by fundamentals, the spot price of styrene has strengthened, which in turn has driven up futures prices. Futures prices better reflect changes in spot supply and demand and market expectations.
The reporter observed that this round of styrene's upward trend began at the end of August. According to relevant data, the mainstream spot prices in East China increased from 8660 yuan/ton on August 29 to 9990 yuan/ton on September 13, an increase of 15.35%; During the same period, the main contract for styrene futures increased from 8388 yuan/ton to 9695 yuan/ton, an increase of 15.58%. In the stage of price increase, the styrene futures market maintained a stable and rational operation, with futures prices lower than spot prices. With the "resonance" rise of spot prices, the basis spread expanded from 272 yuan/ton at the end of August to the current 295 yuan/ton. The discount between the far month contract EB2312 and the near month contract EB2309 reached 879 yuan/ton, conveying the market expectation of easing the forward supply-demand contradiction.
An expert has calculated an account for the reporter: "Considering the cost side of crude oil prices, production equipment operation and maintenance costs, and logistics costs, 8000 yuan/ton is the breakeven point for styrene production enterprises." Since May, due to the expected oversupply due to capacity expansion, styrene prices have continued to decline, falling below 8000 yuan/ton, making it difficult for upstream enterprises to operate. The recent recovery in spot prices has injected confidence into industry chain enterprises. Some enterprises are actively participating in risk management in the futures market while seizing the signal of price rise and actively starting production, which is reflected in the recent trading scale of the futures market.
At present, the trading volume and holdings of the main styrene futures contracts have reached a high level since the beginning of this year. Industry chain enterprises, especially upstream production enterprises, see signs of recovery in the futures market and actively engage in hedging to lock in ideal forward sales prices. "The above expert added that the recent basis operation is relatively stable, and the increase in main contract positions may be related to enterprises actively participating in risk management in the futures market after the spot price reaches the profit and loss point, The discount of the far month contract to the near month contract reflects the market's expectation of a downturn in the future market.
Styrene futures have played a price discovery role in spot goods, and upstream and downstream enterprises should actively use futures tools to manage risks and cope with the risk of price fluctuations in this round, "said Dai Yifan.
In Lu Anqi's view, trading volume and holdings are important dynamic indicators of the market, providing useful information about trends and expectations. However, it is also necessary to comprehensively consider other factors to fully understand the current market situation and market trends. All parties should approach the price increase of styrene in this round with caution and rationality, and screen various market information to avoid being misled by incorrect information. At the same time, investors should pay attention to controlling risks, adopt appropriate risk management strategies, have a deeper understanding of fundamentals, and participate in transactions rationally.
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