From the middle of the month to the beginning of March, the styrene market in Jiangsu was long and short, and the stalemate situation continued throughout. After the holiday, the reason why the market is out of the stalemate is the result of interweaving various factors such as the peripheral, upstream and downstream and the supply and demand of the product itself. And nowadays, many factors are still intertwined, and the glue is still the same. The following is a summary of the various fundamental factors:
Strong commodity prices boost confidence in the industry. After the festival, the black line represented by threads, iron ore and coke, and the chemical system represented by L, PP and methanol all went strong. Stronger at the periphery, the support for the styrene market is obvious, and the bulls are pushing up.
The stock index has a strong trend. Within one month, the Shanghai Composite Index rose rapidly from 2584.57 points at the end of January to 3079.5 points, an increase of 19.1%; the Dow Jones index rose from 24,837 to 26,241, an increase of 5.7%.
Raw material market
Crude oil: The continued reduction in production in the countries that have reduced production and the instability in the situation in Venezuela have tightened supply. After the holiday, the crude oil market maintained a volatile upward trend. Sino-US trade negotiations are progressing smoothly and global stock markets are stabilizing, and the industry is optimistic about future demand. As of March 5, crude oil WTI and Brent increased by 5.2% and 6.4%, respectively, compared with the end of January.
Pure benzene and ethylene rebounded synchronously, and production costs climbed. Europe, South Korea cracker planned or unplanned parking overhaul, and domestic styrene manufacturers bulk purchase multiple factors together, compared with the end of January, ethylene CFR Northeast Asia once rose to 1199 US dollars / ton, up 124 US dollars / ton, gains 11.2%. The domestic multi-set styrene plant was intensively overhauled, and the pure benzene FOB Korea rose slightly at 8.1%.
Styrene supply and demand level
Both pure benzene and ethylene rose, and the production cost of styrene rebounded. As of March 5, compared with the end of January, the cost of domestic non-chemical styrene manufacturers increased by 4%. As domestic spot prices fell during the same period, profits fell sharply by 36%.
The plant started smoothly and the profit was stimulated. In 2019, the domestic styrene industry maintained high output and high operating rate. Domestic styrene production increased by 2.1% in February from January, and the operating rate increased by 1.9 percentage points.
In January, styrene imports hit a record high. In January 2019, China imported 395,400 tons of styrene. The monthly import volume increased by 18% from the previous month and increased by 50.7% compared with the same period of last year.
The inventory of East China’s main port has hit record highs, and the mainstream reservoir area is tight. As of March 6, styrene East China main port inventory was 345,500, which is an increase of 124.7′ from the end of December 2018, an increase of 246.9% compared with the same period last year.
Looking at the inventory data of East China’s main port over the years, the inventory in 2019 has hit record highs. The current inventory factor has become an important negative factor in the market.
Affected by the Spring Festival holiday, except for the SBS industry, the operating rate of the main downstream industries of styrene has dropped, with EPS and PS falling by as much as 14% and 22%.
The main downstream industries of styrene remain lucrative. In January-February, the EPS industry’s profit high point was 900 yuan / ton, the low point was 350 yuan / ton, the monthly average level was 744, 595 yuan / ton; PS industry profit high point was 1845 yuan / ton, the low point 1040 yuan / ton, the monthly average level is 1586, 1189 yuan / ton; ABS industry profit high point is 1677 yuan / ton, the low point is 1110 yuan / ton, the monthly average level is 1379, 1179 yuan / ton;
In early March, following the trend of bulk commodities, the stock market in Jiangsu Province rebounded and the news of the two parties was stimulated. Affected by the buying up and not buying down the attitude, EPS manufacturers orders will be heavy. In the mid to late market trend, we need to pay attention to the following aspects:
1. Changes in the trend of bulk commodities will directly influence the mentality of the industry;
2. The development of demand in major downstream industries and the degree of destocking of the main port of East China will directly determine the fundamentals of supply and demand;
3, crude oil and pure benzene, ethylene trends, cost changes on the one hand affect the industry mentality, on the other hand will determine the domestic styrene industry start;
4. The intention of the main fund. Such high-level stocks and slow liquidity are a double test for the main funds and the reservoir area. Whether the two can hold back the pressure and wait for the real point of the turning point still needs to wait and see.
Translated by Google Translator from http://www.cria.org.cn/newsdetail/47955.html