Styrene moves up in anticipation of tightening supply

Ethenylbenzene futures at the Dalian Commodity Exchange continued their increase on Monday and rapidly picked up on Tuesday afternoon, spurred by rumors about Sinochem Quanzhou's potential turnaround, after initially falling in the early morning. The rise was also in line with the rebound in crude oil futures in the afternoon. Spot styrene prices also saw an uptick in East China since last Friday, with discussions for spot goods reaching 8,820-8,850 yuan/mt by Tuesday afternoon.

The market's upward movement was primarily due to the anticipation of a tightening spot supply. ZPC is expected to ship about 50-60kt of styrene to the South China market in November, resulting in fewer shipments to East China ports. Consequently, the styrene port inventory stood at approximately 65.8kt last Wednesday and is expected to remain low in the short term.

In plant news, CNOOC and Shell Petrochemicals Company (CSPC) shut down their 700kt/year No. 2 styrene unit on October 18 for a 55-day maintenance period. Meanwhile, ZRCC Lyondell Chemical reduced its operating rate to around 60% in mid-to-late October due to issues with its upstream naphtha cracker. ZRCC Lyondell Chemical's two-phase operation has a total capacity of 1.22 million mt/year of styrene.

Sinochem Quanzhou Petrochemical was rumored to be planning a one-month maintenance period in November. However, a related source indicated that the company is currently operating its POSM unit at a low rate while assessing the possibility of maintenance. The unit has a production capacity of 450kt/year of styrene. 

Downstream, the operating rate at ABS plants has decreased due to continued widening losses. Chimei has shut down its ABS units in Zhangzhou and Zhenjiang, and Haili has shut down its unit. Operations of PS/EPS units remained broadly stable, with moderate buying interest for styrene.

Styrene plant operating rates have decreased, attributed to widening losses stemming from firmer benzene prices. Lihuayi is rumored to be considering maintenance in November, though a final decision has not been made public. Supply in South China is diminishing due to CSPC's turnaround. Downstream demand remains broadly stable. Trading sentiment is deemed acceptable, buoyed by low port inventory and month-end delivery pressures. The supply-demand structure for November is likely to be balanced to tight. The market is expected to remain volatile in the short term. Attention should be focused on crude oil prices and the status of Lihuayi and Sinochem Quanzhou.