Styrene prices recede on slow purchases

Asian styrene monomer receded Monday tracking the downward move in China domestic market. East China styrene dropped by 500yuan/mt from a three-and-a-half month high 10,100yuan/mt to 9,600yuan/mt March 1. CFR China styrene slumped $50/mt to $1,300/mt.

Ethenylbenzene futures May-delivery (EB2105) contract opened lower Tuesday and closed 537yuan/mt or 5.60 percent lower at 9,050yuan/mt.

The downward trend was mainly due to slowing purchases from downstream producers and selling activities for profit-taking at high prices.

Downstream producers were facing squeezing margins amid hiking feedstock prices, and showing resistance to high styrene prices. End-users were also cautious and they mainly consume stocks.

On the other hand, market participants, including futures companies and capital management companies, were active to sell at high level for profit takings. Overall transactions were thin after the delivery in end February.

China's exports have boosted market sentiment, however, the durability of such bullishness would be uncertain after the price hike and resistance from downstream buyers. More exports emerged in the first quarter of 2021 with more FOB China cargoes concluded, particularly in H2 February when global supply tightened due to unit outages. March loadings would be quite high and exports may be around 60-100kt, according to market sources and our estimated. Currently, East China prices were still lower than CFR leve3l, which would further encourage exports and curb imports.

However, China domestic supply remains ample with rapid capacity growth. Anhui Jiaxi New Materials Technology fed feedstock to its 350kt/year styrene unit on January 21 and achieved on-spec styrene on January 28. Sinochem Quanzhou Petrochemical fed raw materials to PO unit of its 250/450 kt/year POSM plant in Fujian province in late February, and is expected to start styrene in late March. CNOOC and Shell Petrochemical is expected to start its 700kt/year styrene unit in April.