Under the background of large refining and chemical production, the pressure of pure benzene and styrene has become prominent, and production profits have been significantly compressed. Since the beginning of this year, with the impact of the epidemic, East China's styrene stocks have continued to rise, and production profits have been suppressed for a long time. On the contrary, the downstream resin industry has continued to be in a better state of production and sales since the end of last year, and production profits have gradually increased, and it is currently at a historical high in the past three years. According to industry insiders, the decline of profits in the industrial chain will become a medium-term trend, and the downstream of styrene will enter an era of high profits.
It is understood that the high interest rate advantage of styrene no longer exists. Since the end of last year, the annual profit of styrene has continued to decline from an average of 1,000 yuan/ton, which has shrunk seriously.
"From the perspective of the profit of the crude oil-naphtha-pure benzene-styrene-plastics industry, the profit volatility of each link is relatively large." According to an expert, in terms of profit margin changes, naphtha was surging at the end of 2015. After high, it drops to around 15%-20%. The profit margin of pure benzene began to enter a downward channel at the beginning of 2017, and the start-up time was more than one year later than naphtha. Although there was a slight rebound during this period, it weakened again after May 2020. The decline in styrene profit margins started after June 2019, and the start-up time was two years later than pure benzene. As for the downstream, after June 2019, after the styrene profit rate declined, the profit was given to the downstream EPS and PS, and the downstream profit increased significantly.
Take EPS as an example, from the previous 100-500 yuan/ton to the current 1500-2000 yuan/ton. The profits of PS and ABS are also considerable. Among them, ABS has a huge profit, which is above 4000 yuan/ton.
Similarly, in the eyes of professionals, the profit change of the styrene industry chain is quite obvious. Previously, the profit of the styrene industry chain was mainly concentrated on the cost side, that is, the styrene side.
It is understood that sustained and stable industry profits have attracted a lot of investment intentions. Coupled with the rise of integrated refining and chemical bases, styrene quickly became an investment hotspot. From the end of 2019 to the beginning of 2020, the Dalian and Zhoushan refining and chemical integration projects were put into production. As a supporting device for the refining and chemical projects, the production capacity of styrene rose trailingly.
"At the end of January, 1.92 million tons of production capacity were released, and 1.08 million tons were put into production in the second half of the year. For a bulk commodity with a domestic demand of only more than 11 million tons, the year-end production capacity growth rate will reach 32%, which is a fast growth rate. "Experts said that at the same time, Jiangsu's terminal inventory broke through a historical high and rose to nearly 400,000 tons, far exceeding market expectations.
With the increasing pressure of oversupply of styrene in China, styrene has given its profits to the downstream, leading to a significant increase in downstream profits. Since the beginning of this year, the trend of industrial chain profits shifting to the downstream has been very obvious.
"In the downstream EPS and PS market price determinants, the influence of supply and demand is gradually increasing, and the cost transmission is gradually decreasing. By 2024, styrene production capacity will continue to expand at a high speed, and the supply growth rate will exceed the demand growth rate. Declining profits will become a medium-term trend," said Song Xiaodong, an analyst at Zhuochuang Information.
From the perspective of the scale of installations, the production capacity of domestic styrene plants is relatively dispersed. In recent years, the downstream resin industry has gradually integrated production capacity. After some of the production capacity has been cleared, it has gradually become an oligopoly.
"In the short term, excess inventory continues to suppress the increase in styrene production profits. In the long term, styrene is currently in a cycle of capacity expansion, and the corresponding downstream capacity release cycle is relatively lagging, and the downstream consumption of styrene raw materials It is difficult to improve temporarily." Shi Hanjian, a researcher at Zheshang Futures, said that the high downstream profit is mainly due to the staggering of the upstream and downstream capacity release cycles. The current downstream new capacity release progress is clearly behind the upstream styrene capacity.
According to Longzhong's research, the downstream demand for styrene will grow slowly in the next one or two years, while the growth rate of styrene supply will still be large, which will support the downstream era of high profitability. However, market participants reminded that in the future, we still need to pay attention to whether the high-profit downstream and downstream will drive more new production capacity, and the upstream styrene may appear to be very expensive after continuous low prices.
Source: Chemical Network
