Styrene Production Growth Slows, Idle Capacity Increases

2024 marks a year with minimal capacity additions in the styrene market, with only Hongwei Chemical's 450 kt/year plant coming online. This has led to a significant slowdown in capacity growth, reaching historic lows. Additionally, many plants have seen extended shutdowns, including Yuhuang's two units with 500kt/year in total, which have shifted to producing ethylbenzene as needed, while Shuangliang Leasty's plant has been idle for a prolonged period. Several smaller plants such as Keyuan, Huaxing, Dongming, Anqing, Jilin, and Jiujiang have been closed for the medium to long term, keeping industry operating rates at low levels. Prolonged losses in the styrene industry have prevented the continuous operation of newly commissioned styrene units. Notably, Zhongtai Chemical's large ethylbenzene unit has yet to start production, with the startup date delayed until 2025.

In 2025, capacity additions are expected to reach 3 million mt, primarily driven by Sinopec and PetroChina's integrated project upgrades. These projects have relatively certain timelines. However, the long-term idling of some styrene units is expected to remove around 500 kt of capacity from the market. Concurrently, new downstream PS/ABS units will come online, supported by Zhejiang Petroleum & Chemical and Hengli Petrochemical's high-performance plastic projects, which integrate production from upstream ethylene and benzene to engineering plastics. Some plants are utilizing the hydrogen byproduct from the ethylbenzene dehydrogenation process for hydrogen peroxide production, which helps balance profitability. After 2025, the majority of new styrene capacity will adopt the PO/SM co-production process. Hongwei's 450 kt PO/SM unit successfully came online in October, while Zhongtai Chemical and Yulong Petrochemical's styrene units are expected to start production in Q1 2025. As of 2024, China's styrene capacity stands at 21.81 million mt, and by 2025, it is expected to reach 24.3 million mt, excluding 500 kt of capacity from Sinopec and PetroChina's upgrades.

Due to the continued losses in the styrene industry, some non-integrated units are no longer viable for operation. Moreover, as Sinopec and PetroChina upgrade their projects, older units will undergo long-term shutdowns. The estimated domestic styrene production in 2024 is 15.45 million mt, representing a growth rate of 3.73%. In 2025, domestic styrene production is forecasted to reach 16.3 million mt, with an estimated growth of 5.5%, marking slower-than-expected growth overall.