At present, the main contract price of styrene futures fluctuates in a narrow range of 7300-7500 yuan / ton for more than one month. Recently, under the influence of the escalation of tensions in the Middle East, although the main contract price rebounded, it still failed to break through this operating range. Looking forward to the future, the contradiction between supply and demand of styrene still exists, and the period price may be dominated by weak operation.
Limited impact of us Iraq incident
On January 3, the United States carried out an air raid on Baghdad International Airport, killing major general Sulaimani of the Islamic Revolutionary Guard. Tensions in the Middle East escalated rapidly, international oil prices soared, and styrene rebounded. On the morning of January 8, Beijing time, the U.S. Air Force Base in Iraq was attacked by rockets, and the energy and chemical sector rose again rapidly. The tense situation in the Middle East stimulated the sharp rise of crude oil, which to some extent pushed up the cost of styrene. However, as the proportion of styrene imported directly from Iran is less than 3%, its direct impact on domestic styrene supply is limited. And trump said the United States will impose new economic sanctions on Iran, but is willing to cooperate with Iran on common interests. Subsequently, the international oil price fell sharply, and the market confidence in long styrene will also weaken.
Rapid expansion of production capacity
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According to the domestic production situation, the price of pure benzene has increased recently. The data shows that on January 8, the price of Jiangsu’s cans was 5900 yuan / ton, about 150 yuan / ton higher than the low point at the beginning of the year. The price of ethylene is relatively stable near the lowest level in the past decade. The price of raw materials increased steadily, and the profit of styrene was poor in the near future. According to rough estimation, the production cost of styrene in East China is about 7600 yuan / ton, and the processing profit is about – 300 yuan / ton. Although the production efficiency of styrene is not ideal at present, there are not a large number of units in China for shutdown maintenance. Data shows that as of January 2, the national styrene operating rate was 82.5%, near the highest level in the same period of nearly six years. At present, the 300000 t / a styrene unit of Xinyang Technology is still under maintenance, and it is planned to restart in mid January; Shandong Yuhuang plans to start on January 10, and there is no new maintenance plan. Therefore, it is expected that the domestic styrene operating rate will remain high in the near future.
To make matters worse, on December 30 last year, the “40 million tons / year refining and chemical integration project (phase I)” oil refining, aromatics, ethylene and downstream chemical plants invested and built by Zhejiang Petrochemical Company have opened the whole process, realized stable operation and produced qualified products. Zhejiang Petrochemical phase I project involves an annual production capacity of 1.2 million tons of styrene, accounting for about 13% of the existing domestic production capacity. In addition, in the first half of the year, Hengli Petrochemical (600346, Guba) styrene plant with an annual capacity of 720000 tons is planned to be put into operation. In the second half of the year, Baolai chemical, Anhui Jiaxi and other units are planned to be put into operation. It is expected that domestic styrene supply will become more relaxed.
Insufficient demand follow-up
At present, the overall profit of the downstream industry is still good, but some industries are in the off-season demand. Data shows that in early January, EPS gross profit of East China was about 730 yuan / ton, PS gross profit was 1000-1110 yuan / ton, and ABS manufacturer’s profit was about 1900 yuan / ton. High profit makes the industry’s willingness to reduce the negative rate of operation weak, but some industries continue to decline due to the impact of the off-season. As of January 2, the operating rate of EPS industry is 47.34%, which is the seventh consecutive week of decline. As the real estate industry has entered the construction slack season, it may continue to decline in the later period. PS demand is good, and the commencement has been improved, but Jiangsu green an Qingfeng stopped for maintenance on January 5, and will restart in early February, about 25 days of maintenance, which may lead to a slight decline in the operating rate of the industry. ABS, UPR and styrene butadiene industry are relatively stable 。 In addition, in the near future, most prices in the downstream market have declined slightly, and the overall operating rate of the short-term downstream industry is likely to weaken slightly.
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From the medium and long-term analysis, in 2020, the new capacity of downstream EPS, PS and ABS is planned to be 740000 tons, 400000 tons and 200000 tons respectively, which is less than the increase of upstream capacity. In addition, most new downstream units are planned to be put into operation in the second half of 2020. Considering the postponement, the capacity that can be realized in 2020 will be more limited.
In a word, the domestic styrene operating rate is at a high level. In addition, new units of Zhejiang Petrochemical Co., Ltd. are put into operation, and there are few new maintenance plans. It is expected that the supply of styrene will be loose in the short term. On the demand side, it is difficult to significantly increase the demand due to the holiday near the Spring Festival downstream. Styrene is expected to gradually enter the accumulation stage. In terms of operation, it is recommended to give priority to short selling and set stop loss.
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