China's styrene up despite new capacities

Styrene monomer prices rebounded since last week in anticipation of tight spot availability, despite capacity increase in China. Spot prices were around 9,070-9,100yuan/mt in early afternoon of April 1.

Sinochem Quanzhou Petrochemical and CNOOC & Shell Petrochemical II started their POSM units and have already achieved styrene products in end March. The two with total capacity of 1.15 million mt/year contributed around 10 percent of increase in China's total styrene capacity. By now, China's styrene capacity is around 13.55 million mt/year.

However, port inventory continued decreasing in East China with continuous exports. Tank inventory in East China main ports decreased by 36.5kt week on week to 110kt on Mar 31. Coupled with the inventories in Kingboard and Huarun, the figure was 122.5kt. Commercial inventory, known as the inventory held by traders, was 72.5kt.

More than 100kt of FOB China cargoes were loaded in March, the loading schedule would likely maintained in April, as exports from US may not recover rapidly although most of US units were restarted.

China's styrene imports decreased since February and March import would be much lower due to supply disruptions outside China. April import would remain low and May figure may recover.

In terms of China domestic supply, April domestic output loss due to turnarounds would outpace the increment from Sinochem Quanzhou and CSPC II.

Inventory level is likely to decrease, particularly in the first half of April, due to limited supply increment but steady demand. The spread between April cargo and DCE EB05 contract strengthened apparently. With the aggressive price increase pushed by tight spot availability, market participants should be also aware of potential price retreat on profit takings.