Styrene supply holds steady despite outages

Despite recent unplanned outages and scheduled maintenance at several major styrene production facilities across China, overall market supply remains resilient. Zhejiang Petrochemical's reduced operating rates triggered a modest rebound in futures prices, with paper cargo values trending upward. However, this price movement has not translated into stronger market participation, as traders remain cautious and the near/far-month basis continues to narrow.

New capacity additions are expected to offset supply losses from ongoing maintenance. Jilin Petrochemical's 600 kt/year styrene unit is slated to begin trial operations in late September, while Guangxi Qinzhou Petrochemical's similarly sized unit is targeting a November start. Upstream cracker and PS units are also expected to begin trial runs by mid-October, supporting a stable supply outlook.

Port inventories remain elevated, with tank capacity nearing saturation earlier this quarter. As a result, some producers have scaled back shipments, leaving latent inventory at plant sites. Despite a narrowing basis for forward-month paper cargoes, the market remains in a contango structure, prompting producers to lock in margins and aggressively oversell.

Since late August, demand from EPS and PS sectors has shown modest improvement. The first half of September saw inventory digestion and increased offtake, with downstream operating rates ticking up. Anticipation of pre-holiday restocking ahead of the National Day break is expected to further support demand, potentially lifting PS margins back into positive territory.

September styrene demand from the three major downstream sectors is projected to increase by ~50 kt. October demand is expected to hold steady. Supply in September is slightly lower than August, but new capacity will compensate for October–November maintenance losses.

While port and plant inventories are expected to decline ahead of the holiday, hidden overselling and latent stockpiles suggest overall inventory levels will remain high. Post-October, destocking momentum may weaken, and styrene margins could compress further to rebalance supply-demand dynamics. In the short term, the market remains broadly oversupplied, and isolated outages are unlikely to disrupt this equilibrium.