Styrene rally slows after days of increase

Styrene market rebounded since late June with spot price in East China up from 7,150yuan/mt to about 7,600yuan/mt. However, the upward momentum cooled down after rising for 10 executive trading days. The inter-month spread shivered at low level.

The short-term price increase was mainly due to the speculations on ethylbenzene demand for gasoline blending. Market participants expected more ethylbenzene demand for blending since China imposed consumption on mixed aromatics starting from July 1, which led to decrease in styrene output.

Currently, some private companies has lowered the operating rate of styrene units. However, styrene output remained the majority of the production.

Styrene monomer tank inventory in East China main ports decreased by 3.3kt week on week to 77.5kt on Jul 12, 2023. Cargo arrival was 37kt and offtake was 40.3kt. Commercial inventory, known as the inventory held by traders, was 50.6kt.

Styrene supply-demand structure will be in tight balance in July. The supply could return to a high level but the recovery would be lower than previous expected. Tianjin Dagu will shut its 500kt/year unit for a week in July. Wanhua is expected to delivery its cargo on July 15. ZPC is running its POSM unit at 50-60%. Shanghai SECCO plans to restart on July 18. Anqing new unit is running at about 80%.

In downstream, ABS plant operating rate could sustain in July given improved margins in June. SM demand from PS will also increase with the startups of new PS lines of Statellite and Anqing Xingda. Meanwhile, SM stocks have been reduced to a quite low level in downstream. The demand for restock has also improved.

Styrene prices have rebounded on good styrene fundamentals and ethylbenzene demand for gasoline blending. However, after days of increase, the upward momentum has weakened. Traders chose to sell at high level and long positions in futures market were also reduced. Looking ahead, the supply-demand structure will weaken in August.