The styrene market is in decline

The latest statistics show that in the first nine months of this year, China's cumulative export volume of styrene was 542,300 tons, a year-on-year increase of 189.
63%.

The author believes that although the export volume has increased by nearly 2 times, it is still difficult to alleviate the pressure on the
domestic styrene market.

First, styrene production capacity has expanded
significantly.
In 2022, with the commissioning of new styrene plants in Zhenhai Phase II, Shandong Lihuayi, Maoming Petrochemical and Bohua Development, and the expansion of Dushanzi's 40,000-ton/year old plant, it is expected that 3.
64 million tons of styrene production capacity will be released
throughout the year.
As of the end of October, the production capacity has been put into operation of 2.
84 million tons/year, and the total domestic styrene production capacity has reached 17.
592 million tons/year
.
In view of the delay in the commissioning of some new plants and the insufficient release of capacity of individual new plants, the overall expansion rate and production growth rate of the styrene industry are lower than expected
.
However, in the absence of synchronous follow-up of demand, styrene overcapacity has become more and more obvious, and the most direct manifestation is that the capacity utilization rate is not satisfactory, with production increasing by 1.
0971 million tons year-on-year in the first 10 months, while capacity utilization rate decreased by 8.
56%
year-on-year.
"One liter and one drop" confirms the difficulty
of the styrene industry.

Second, imports are expected to
increase.
Since the beginning of this year, there have been many overhauls of foreign styrene plants, and the overall start is low
.
In addition, the price of crude oil has risen sharply, the cost of foreign styrene production is rising, but also affect the enthusiasm of enterprises to start work, foreign styrene supply is in short supply, internal and external prices are inverted obviously, in addition to a certain amount of contract imports, it is difficult for China to see the source
of import trade.
Coupled with the increase in the domestic self-sufficiency rate, styrene imports in 2022 have shrunk to a certain extent, with the cumulative import volume in the first September being 825,500 tons, down 34.
51%
year-on-year.
Although imports have decreased significantly, China is still a net importer of
styrene.
Especially as the end date of styrene anti-dumping approaches, China, as a large consumer of styrene, good market prospects will inevitably attract a large influx of foreign products, when the styrene market will be full of gunsmoke, price war is inevitable
.

Third, the cost transmission is not smooth
.
Styrene maintains a high correlation
with the raw material benzene.
Since the beginning of this year, the pure benzene market has shown strong resistance to falls, high cost support is strong, styrene market passively followed, but the increase is not as good as raw materials, styrene industry continues to bear high cost pressure
.
In addition, the high profit model of the downstream, especially the ABS industry, is no longer there, and even falls into a loss situation for a short time, resulting in poor transmission of upstream costs, thin profits of styrene companies, and non-integrated devices or even losses
.

On the whole, styrene production capacity continues to be released, coupled with the end of anti-dumping, the supply side will remain sufficient, and demand follow-up is insufficient
.
It is expected that the styrene market will seek a new balance
in the volatility in the later period.