Styrene spot/futures prices kept decreasing

Spot styrene prices kept decreasing, tracking the drop in futures despite tight supply on slow recovery of integrated units. Overall transactions were thin and deals were mainly around 10,000yuan/mt since early July. Supply was expected to recover in August with the restarts of Wanhua and Hengli, despite turnaround of ZPC. Coupled with expectation of weakening crude oil market, styrene market kept decreasing.

Styrene demand also weakened in July. In downstream, producers were suffering losses. ABS/PS producers lowered operating rate. Ningbo Jianlong started a 200kt/year EPS unit, but the support to styrene market was limited.

With the national policy facing the stimulation of automobile consumption and home appliance subsidies, the consumption of ABS/PS has been driven, boosting consumer demand in the second half of the year, but the second half of the year is also accompanied by the increase of supply.

Styrene monomer tank inventory in East China main ports increased by 3.8kt week on week to 54.3kt on Jul 13. Cargo arrival was around 19.9kt and the offtake was around 16.1kt. Commercial inventory, known as the inventory held by traders, was 35.9kt. The increase was mainly due to delayed export cargo loadings this week.

Exports are expected sustain in August but the volume might be less than in July. Overall inventory is expected to increase as demand increase will be less than supply increment. Coupled with receding oil prices, styrene market is expected to weaken.