Styrene supply remains ample despite lower operating rate

China's styrene prices remained fluctuating due to the weakness in fundamentals, although crude oil prices rebounded after receding.

Operating rate of styrene units in China has dropped to nearly two-year low of around 69% this week due to poor economics. Zhejiang Petroleum & Chemical shut one 600kt/year styrene unit on March 8 for 20 days of maintenance. Shanghai SECCO Petrochemical shut its 700kt/year styrene unit on March 16 for 15 days of maintenance. As for non-integrated units, overall operating rate remained low due to persistent losses.

Despite the low operating rate, overall domestic supply remained ample after the startups of Wanhua Chemical, Lihuayi and ZRCC-Lyondell #2. Meanwhile, with the completion of integrated unit turnaround, supply will recover with the increase of operating rate. 

In downstream market, operating rate decreased on weakening margins as end-use demand remained tepid. Meanwhile, in northern China, EPS plants were inactive to buy styrene as transportations were restricted due to the Covid-19 situation. 

The market is still oversupplied. The market could find supports due to inventory decrease previously. However, export cargo loadings are slower than expected and styrene demand weakens. In short term, styrene prices would be affected by crude oil prices. Eyes could rest on the recovery in demand.