China Drying Network News styrene has become the star of the recent market. After hitting a low of 9,100 yuan (t price, same below) in early June, the price of styrene in the East China region has been oscillating and rising; at the end of August, it has exceeded 11,000 yuan, and then the rate of increase has started to accelerate; on September 17, the price of styrene in East China skyrocketed. 600 yuan, reaching 13,000 yuan; After a brief adjustment, the price climbed to 13,400 yuan again on September 26, reaching the highest point since June 2008, and then recovered slightly from the high point; the offer on October 8 was 12,800 yuan. There was little change before the holiday.

The crazy increase in styrene prices this year is a far cry from last year. The lowest point of the domestic market last year was 9900 yuan at the beginning of November, the highest point was 12,000 yuan at the beginning of August, and the annual fluctuation range was only 2100 yuan.

According to the chemical online statistics, as of September 26, the price of styrene rose by as much as 18.1% in the month, which was the highest among aromatic products. The increase in pure benzene in the upper reaches of the same period was 11.5%. The price of another raw material ethylene (CFR Northeast Asia) even fell by 1.8%. Styrene prices have risen significantly more than upstream raw materials. So why is styrene so crazy?

The reason for this is mainly the supply side. Starting in August, several aromatics plants such as Tianjin Petrochemical, Qingdao Petrochemical, and Dalian Fujia Dahua were shut down. The domestic pure benzene market was in tight supply and styrene production was interrupted.

Tianjin Petrochemical's 400,000-ton/year pure benzene plant was closed on August 15 for a 45-day overhaul, which directly led to the closure of the 500,000 tons/year styrene plant in Tianjin Daxie. Jiangsu Shuangliang Lishide Chemical Company reduced the operating rate of its styrene plant from 80% to 90% to 50%. In addition, Huajin Chemical shut down Panjin's 225,000 tons/year styrene plant from August 1st for a 45-day overhaul.

On the Other hand, the decrease in ocean arbitrage has further exacerbated the styrene supply in Asia. Styrolution overhauled 455,000 tons/year of styrene in Sarnia, Canada, and stopped it until the end of October. The company’s 485,000 t/y styrene plant in Texas in the United States remained on-street, and the company did not announce when the unit would restart. The overhaul of these two large devices made the styrene supply available for export in the North American market tight. In Europe, in mid-September, the market price of styrene was US$1,750 to 1,820 (FOB Rotterdam), which was about US$200 higher than the price of CFR China in the same period. This has led to a reversal of arbitrage, and some traders have shipped styrene from Asia to Europe, which has further strained the supply of styrene in Asia.

Due to tight supply, domestic styrene stocks showed a downward trend. At the beginning of the year, the stock of styrene in East China Port was about 100,000 tons, and it continued to rise after that and reached 140,000 to 150,000 tons in February. However, after June, the port inventory fell for 10 consecutive weeks. As of September 26, stocks have fallen below 40,000 tons, only about 1/4 of the February peak.

It is worth noting that the high price of styrene has already depressed the demand. Although the third quarter is the peak of Chinese export product production, the domestic styrene resin demand will generally increase. However, this year, in the absence of smooth external demand, the soaring price of styrene further inhibited the downstream operating rate.

In the case of styrene resin, manufacturers are forced to reduce the operating rate of the device. Taiwan's Jura Group shut down its 450,000-tonne/year expandable polystyrene (EPS) facility in Jiangyin on September 17 to stop and overhaul it. Another large EPS producer, Xingda Group, also reduced the overall operating rate of its equipment from full load to 70%. In terms of polystyrene, Yanshan Petrochemical and Wuxi Weida devices were shut down; Hong Kong's petrochemical plant's operating rate of 140,000 tons per year fell from 90% at the beginning of August to 60% to 65% in September; Fujian Fangxing, Zhanjiang New Central America, etc. The equipment also maintained low-load operation; Shantou Aishida opened three production lines before the National Day was closed, one on October 10 has resumed production, and the other two have been resumed. In terms of ABS, the current average operating rate of domestic installations is 55% to 65%, while the operating rate in the previous production season is generally 75% to 85%.

Due to the apparent lag in demand, traders have differences on whether the market outlook can continue to rise, and some businesses have begun to arbitrage. On September 18, the price of styrene in the East China market quickly fell from a high of 13,000 yuan to 12,700 yuan. Despite the gradual recovery of prices after that, there is no doubt that the styrene market, with a lively hype, has sounded the alarm.

However, there are still some positive factors in the short-term styrene market. From the perspective of the upstream raw materials, the price of pure benzene is still firm, and the domestic market price has reached 10,300 yuan. However, with the continuous fall in international crude oil prices, there is a certain degree of uncertainty about whether benzene can maintain its strength. From the supply side, Tianjin Daxie’s 500,000 t/y styrene plant has been restarted, but it will give priority to supply contracted goods and downstream ABS units with limited export; Shandong Yuhuang’s 200,000 t/y styrene plant operating rate remains at 60 %; 250,000 tons/year of Changzhou Xinri and 100,000 tons/year of Ningbo Keyuan entered the shutdown for maintenance. Therefore, the market supply is still tight. It is expected that the price of styrene will still be supported after the National Day holiday, but the trend of the early crazy market should be difficult to reproduce.

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