Styrene downstream markets remain weak

As the first half of 2022 draws to a close, China domestic styrene downstream market still performs poorly after the weakening of epidemic control and the recovery of logistics. The EPS and PS prices basically follow the rise and fall of styrene, ABS continues to run weakly, and the supply and demand of each product does not keep getting better. The reason is that, on the one hand, the epidemic control period is in the traditional peak season of styrene downstream products. After the end of the epidemic control policies, although local policies continued to stimulate, the industries involved have gradually entered the traditional off-season, and the actual demand growth is insufficient. On the other hand, China domestic supply continues to increase, and the supply and demand structure adjusts. Also, due to the poor benefits of enterprises, the enthusiasm for production is low and the supply and demand continues to be weak. Then, let’s analyze the actual changes in the downstream of styrene in detail.

1.The apparent demand growth is less than expected.

Affected by changes in China domestic supply capacity and the continuous impact of the previous epidemic, the growth of apparent demand in the early stage of 2022 is lower than expected. ABS remains at a negative, PS growth slows down and EPS turns negative. Among them, from January to May 2022, the apparent demand for ABS is 2.4117 million tons, down 1.61% compared with the same period last year. The demand for PS is 1.8518 million tons, an increase of 7.44% over the same period last year. The apparent demand of EPS is 1.2299 million tons, a year-on-year decrease of 9.53%.

2. Imports continue to shrink

In the first half of 2022, due to the increase in China domestic supply capacity, especially the production capacity of PS and ABS since the second half of 2021, the demand growth is indeed lower than expected, and the import volume of ABS and PS continues to decline. China domestic ABS imports from January to May in 2022 are 629,000 tons, a year-on-year decrease of 15.77%; and PS imports are 366,700 tons, a year-on-year decrease of 27.43%.

3. Downstream market performed poorly.

From the perspective of the downstream market, especially the home appliance market with the largest application range, the mainstream home appliances experienced negative growth in a large range in the first half of 2022. From January to May 2022, the output of refrigerators is 33.805 million sets, a year-on-year decrease of 8.11%; the output of freezers is 10.428 million sets, a year-on-year decrease of 24.76%; the output of washing machines is 34.707 million sets, a year-on-year decrease of 4.12%; and the output of air conditioners is 99.405 million sets, a year-on-year decrease of 2.15%. The sluggish operation of the home appliance market is not only related to the downturn of the overall China domestic terminal manufacturing industry under the epidemic, but also the decline in exports. In addition, the service life of large home appliances such as refrigerators is long and the demand for short-term repeat purchases is not high. Moreover, the increase in unit prices under the influence of rising freight rates and raw materials has also led to a decrease in exports.

Generally speaking, the supply and demand of the three major styrene downstream products in the first half of 2022 is not optimistic, and the growth is lower than expected. This situation has been accelerated under the epidemic, and the overall expansion of the subsequent styrene industry chain is still continuing, although the startup of some plants has been delayed, the pressure on the supply side is maintained. Judging from the situation in the first half of the 2022, the impact of the China domestic epidemic is relatively great. The transportation pressure and supply and demand pressure have led to a significant decline in the overall operating rate of styrene downstream. In addition, the increase in China domestic supply capacity has caused the decline in ABS and PS imports. The export situation of EPS is acceptable, but it is difficult to change the current overall product supply and demand pattern and the overall market trend. Judging from the situation in the second half of 2022, the impact of the domestic epidemic has been significantly weakened, but the peak season in the first half of 2022 has been missed. Although the market had been stimulated by local consumer policies, it is difficult to quickly reverse the current relatively weak market due to the impact of the off-season demand at the beginning of the second half of the 2022. Styrene downstream products will continue to be weak if the raw material styrene cannot provide support.