Styrene remains firm on tight supply-demand structure

Styrene monomer market remained firm in Sep with spot price in East China up from 9,200yuan/mt in early Sep to 9,750yuan/mt on Sep 19. The short squeeze continued despite weakening oil price.

In Sep, China's styrene imports are expected to recover to the highest level within this year. China domestic output will also recover with the restarts of New Solar & Yuhuang, and the run rate increase of ZRCC-Lyondell, CSPC and Hengli.

In downstream, operating rate has increased on improving profits on better demand, and the startups of new units are faster than anticipated, particularly EPS. In late Sep, Anqing Xingda, Leting Xintai and Yuandong Chengyi started EPS units in Sep. However, the startups of PS/ABS units were slow.

Downstream demand will keep good due to the preparation prior the National Day holidays. And overall supply-demand structure of styrene would be tight in short term. Meanwhile, positions in futures market has not reduced clearly despite the short squeeze in late Aug, which also lend supports to the market.

In Oct, styrene supply is expected to increase and downstream producers may shut units during the holidays. The supply and demand structure is expected to weaken. In Nov, China domestic will keep increase with the startups of Satellite, ZPC and Shandong Junchen with total capacity of 1.8 million mt/year.