The hottest styrene industry maintains high output

In 2019, the styrene industry maintained high output and high start-up rate

in 2019, the styrene industry maintained high output and high start-up rate

March 11, 2019

from the middle and late January to the beginning of March, Jiangsu styrene market was stuck, and the stalemate consolidation trend ran through. The reason why the post holiday market came out of the stalemate was the result of the interweaving of many factors at the peripheral, upstream and downstream levels and the supply and demand level of the product itself. And up to now, many factors are still intertwined, and the adhesion situation is still Chinese paint. The following is a summary of various fundamental factors:

Commodities

the strength of commodities boosted confidence in the industry. After the festival, the black department represented by screw thread, iron ore and coke, and the chemical department represented by L, PP and methanol all went strong. The strength of the periphery significantly supported the styrene market, and the Bulls took advantage of the situation to push up

the stock index has a strong synchronous trend. Within one month, the Shanghai Composite Index rose rapidly from 2584.57 points at the end of January to 3079.5 points, up 19.1%; The Dow Jones index rose 5.7% from 24837 to 26241

raw material market

crude oil: the continuous production reduction in production reduction countries and the unstable situation in Venezuela jointly tightened supply, and the crude oil market maintained a volatile upward trend after the holiday. With the smooth progress of Sino US trade negotiations and the stabilization of global stock markets, the industry is optimistic about future demand. By March 5, compared with the end of January, crude oil WTI and Brent increased by 5.2% and 6.4% respectively

pure benzene and ethylene rebounded synchronously, and production costs rose. Due to the combined effect of planned or unplanned shutdown and overhaul of cracking units in Europe and South Korea, and batch procurement of domestic styrene manufacturers, ethylene CFR Northeast Asia once rose to $1199/ton, up $124/ton, or 11.2% compared with the end of January. Many styrene units in China were overhauled intensively, and the FOB increase of pure benzene in South Korea was slightly slow at 8.1%

styrene supply and demand level

pure benzene and ethylene both rose, and styrene production costs rebounded. As of March 5, compared with the end of January, the cost of domestic non univalent styrene manufacturers increased by 4%, and the profit fell sharply by 36% due to the lower domestic spot price in the same period

the operation of the unit is stable and the profit is stimulated. In 2019, the domestic styrene industry will maintain high output and high start-up rate. In February, this method could not be adopted for domestic phenylethylene. The production of alkene increased by 2.1% compared with January, and the operating rate increased by 1.9 percentage points

styrene imports hit a record high in January. In January 2019, China imported 395400 tons of styrene, with an increase of 18% over the previous month and 50.7% over the same period last year. Such processes have long been approved by FDA for medical purposes

the inventory of East China's main port has repeatedly reached new highs, and the tank capacity of the mainstream reservoir area is tight. As of March 6, the inventory of styrene in East China main port was 345500, an increase of 124.7% over the end of December 2018 and 246.9% over the same period last year

looking at the inventory data of East China's main ports over the years, the inventory volume in 2019 repeatedly hit a record high. At present, the inventory factor has become an important negative factor weighing on the market

downstream industries

affected by the Spring Festival holiday, except for SBS industry, the operating rate of main downstream industries of styrene has generally decreased, of which EPS and PS have decreased by as much as 14% and 22%

the main downstream industries of styrene maintain huge profits. In January, the profit of EPS industry reached a high point of 900 yuan/ton and a low point of 350 yuan/ton, with monthly average levels of 744 yuan/ton and 595 yuan/ton respectively; The profit of PS industry has a high point of 1845 yuan/ton and a low point of 1040 yuan/ton, with monthly average levels of 1586 and 1181 respectively. Generally, users of iron and steel enterprises choose a single space structure of 9 yuan/ton; The profit of ABS industry has a high point of 1677 yuan/ton and a low point of 1110 yuan/ton, with monthly average levels of 1379 yuan/ton and 1179 yuan/ton respectively

in the first ten days of March, following the trend of bulk commodities, Jiangsu spot market rebounded, stimulated by the decline of inventory in East China's main ports and the good news of the two sessions. Influenced by the buying mentality, EPS manufacturers have a large number of orders. The market trend in the middle and late ten days still needs to pay attention to the following aspects:

1. Changes in the trend of bulk commodities will directly affect the mentality of the industry

2. The demand development of major downstream industries and the de stocking degree of East China's main ports will directly determine the supply and demand fundamentals

3. The trend of crude oil, pure benzene and ethylene, on the one hand, cost changes will affect the mentality of the industry, on the other hand, it will determine the start-up of the domestic styrene industry

4. Intention of main funds. Such high spot inventory and slow liquidity are a double test for the main funds and the reservoir area. Whether the two can withstand the pressure and wait for the inflection point to really come remains to be seen