In the context of rising international crude oil prices, increasing exports, and low inventories, the strong pattern of styrene remains unchanged. However, due to the lower than expected recovery of downstream demand, the upside of styrene is limited, and there is a fear of high vibration in the later period.
Due to the delay in the resumption of OPEC+ production, international crude oil prices continue to rise, supporting the price of styrene. At the same time, foreign installations have stopped, and the export situation is expected to continue. However, although the current demand for styrene is recovering, it is not as good as expected, so the rise of styrene is hindered.
Strong cost support effect
Since November 2020, due to the impact of OPEC's lower than market expectations and the start of new crown pneumonia vaccines in major economies around the world, international crude oil prices have continued to rise. WTI crude oil has risen from US$36/barrel at the end of October 2020 to this year At the end of February, it was $63/barrel, an increase of 75%. Since the end of February, the market believes that with the increase in international crude oil prices, OPEC+ may accelerate the process of resuming production. However, at the OPEC+ ministerial meeting on March 4, oil-producing countries believe that the global economy is still very fragile due to the impact of the epidemic. Extend the current production cuts to April.
At the same time, Saudi Arabia announced that it will continue to implement a voluntary production reduction of 1 million barrels per day; although Russia and Kazakhstan have been approved to increase production, the quotas are only 130,000 barrels per day and 20,000 barrels per day, compared to the 7 million barrels per day. It can be ignored, and this part of the quota is mainly used to meet the domestic needs of the two countries. Judging from the current situation, although the demand for heating oil in Europe and the United States will decline as the weather turns warmer, under the background of the delay in OPEC+ production resumption and the gradual recovery of the global economy, the overall pattern of strong international crude oil prices will not change. Play a strong supporting role for petrochemical products.
Strong exports are expected to continue
Affected by better foreign demand and increased exports, domestic styrene port stocks are lower than the same period in previous years. As of February 28, East China port inventory of styrene was 205,000 tons, a decrease of 94,800 tons compared with the same period last year, a year-on-year decrease of 32.10%; South China port inventory was 34,300 tons, a decrease of 35,800 tons compared with the same period last year, a year-on-year decrease of 51.07%. Affected by the extreme low temperature in the United States, local styrene production companies shut down their installations, and there is a shortage of styrene supply.
At the same time, styrene plants in Europe and other countries have also reduced their load, and the styrene gap in the international market has continued to expand. According to estimates by Longzhong Information, domestic styrene export orders will reach 70,000-80,000 tons in March, and the month with more styrene exports is usually only 30,000-40,000 tons. It seems that foreign countries The demand is strong. Foreign styrene prices are rising, there is room for domestic styrene export arbitrage, and this pattern is expected to continue into April. Therefore, strong export demand for styrene is expected to continue, and domestic styrene prices are supported by relatively strong support.
The inventory of domestic styrene manufacturers is also at a low level. As of March 4, the inventory of domestic styrene production enterprises was 142,200 tons, a decrease of 34,500 tons from the same period last year, a decrease of 19.51%. At present, the profit of domestic styrene non-integrated equipment manufacturers is about 800 yuan/ton, a decrease from the previous month, but domestic manufacturers’ inventories are low, and their production enthusiasm has not decreased, and the styrene operating load is at 86.26%. High level, market destocking and supply pressure are limited.
Downstream demand hardly improves
At present, the domestic downstream styrene load is increasing, but the intensity is not as good as expected. As of the week of March 5, domestic EPS operating load was 65.04%, an increase of 14.38 percentage points month-on-month; PS operating load was 78.56%, an increase of 1.49 percentage points month-on-month; ABS was operating at full load, an increase of 3.5 percentage points month-on-month. As the price of styrene continues to rise, the downstream profits of styrene continue to shrink, and downstream companies are resistant to high-priced styrene. Affected by this, many domestic PS devices were shut down again, and it was difficult for the downstream to transmit the cost to the terminal demand. Therefore, the recovery of styrene demand was not as expected, which limited the growth of styrene. The author believes that the styrene material is in a high-level oscillation pattern in the later period, and it is recommended to gradually stop profit with more orders.
Source: Chemical Network
