Styrene market structure turns to backwardation again

With startups of Shenghong Petrochemical's 16 million mt/year refinery and 3.1 million mt/year #2 reformer, the company is expected to get benzene soon. As a result, Satellite Petrochemical is expected to start its 600kt/year styrene unit in Lianyungang, Jiangsu province soon. Meanwhile, PetroChina Guangdong Petrochemical plans to feed oil into its CDU in mid-Nov. Guangdong PC has the capacity to produce 800kt/year of styrene. With the acceleration of integrated units, the market could find supports shortly.

Due to the persistent losses, non-integrated producers have lowered operating rate since mid-Oct and may further lower rate in Nov.

In demand side, overall operations of downstream units are better than in October. Chimei has resumed operations of its ABS and PS units and Hengshui Boke is expected to start a PS unit in Nov.

Despite higher domestic prices, imports are still hard to see clear increase on high freight rate. However, exports to Iran and South America are expected to increase.

In general, total styrene inventory is expected to decrease slightly in Nov, but the market would be oversupplied in Dec. Meanwhile, the possibility of the startup of CITIC Guoan Ruihua's 200kt/year styrene unit in Dec has also increased as Qingdao GON plans to restructure the company.