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Thursday, September 28, 2023

Styrene: Analysis of recent market concerns

Since the first quarter, the domestic styrene market supply and demand stage imbalance, high inventory corresponding to low demand pattern, itself in the first quarter of the styrene downstream industry is in a period of low prosperity, the middle and late March near the major downstream began to gradually enter The normal start-up load is restored, so the consumption of styrene is slow in the cycle, and the port inventory has reached a peak of at least 6 years, reaching around 3.5-360,000 tons, which has led to the trend of styrene.

From the perspective of the domestic economy and the external macro environment this year, the economy is in a period of downward pressure. China’s official manufacturing PMI was 49.2% in February (previous value was 49.5%); the official non-manufacturing PMI was 54.3% (previous value 54.7%). The overall PMI was 52.4% (previous value 53.2%). The PMI fell back and was lower than the glory line for three consecutive months. The downward pressure on the economy is still large, and the market is worried about the macroeconomic slowdown.

In March, Sino-US trade temporarily gained a breathing time. In the latter stage, the eighth round and the ninth round of consultations were to be held. The trade war was greatly delayed in a phased manner. In the second quarter, the domestic demand recovery was superimposed under a series of tax reduction and reduction policies. Consumption is also expected to pick up. Relevant parties have begun to adopt a series of policy measures to stabilize growth and adjust structure. The economy is expected to stabilize in the second quarter.

During the two sessions, the VAT rate was announced to be lowered. For petrochemical enterprises and trading companies, the original applicable tax rate will be reduced to 13% from April 1. After the VAT reform, the prices of styrene and related products will fall, the ex-factory price of the producers, the price of the traders and the price of the futures electronic disk are all tax-inclusive, and the impact on prices is short. The downstream terminal factories have limited impact on their products under the input tax deduction policy. However, the decline in the price of upstream raw materials is expected to form a certain impetus to the terminal consumption, which will benefit the downstream enterprises, help the enterprises to increase production and increase market demand, but it takes time to reflect.

From the perspective of the theoretical production profit of downstream enterprises in March, the profit of styrene is at a low level, and the profits of major downstream EPS, PS, ABS and other production enterprises are at a healthy level. According to data monitoring, the production profit of EPS, PS and ABS in mid-to-late March was 850, 1100 and 1465 yuan/ton respectively. The raw material styrene is low, and the terminal factory has a certain intention to receive the goods. Although the demand-side warming process is slow, the weak macro-level fundamental pattern has not changed, but the market has begun to tend to actively replenish the warehouse, and the destocking of the port inventory is expected. It will also be slow.

From February 2019, the customs imported and exported data showed that China imported 278,300 tons of styrene, the total number of styrene was 673,700 tons, and the average import price of the month was 1011.92 US dollars / ton. The monthly import volume decreased by 117.2 tons or 29.6% compared with the previous month, an increase of 52% compared with the cumulative amount in the same period last year.

The Japanese, Korean, and Taiwanese installations were intensively repaired in March-April, and the import volume to China showed a gradual decline trend. However, under the high inventory base, the inventory reduction process was slow.

The port inventory has not been effectively reduced, and the downstream terminal demand recovery has been hindered. Market participants are worried about whether the subsequent demand can be increased. They are learned by the “3·21” explosion accident of Jiangsu Xiangshui Tianjiayi Chemical Co., Ltd., and the General Administration of Market Supervision issued an urgent notice. Strengthen the investigation of quality and safety hazards of special equipment and key industrial products, strictly implement the safety production responsibility system, and resolutely guard against serious accidents. However, the large-scale elimination of chemical parks has just begun. Market participants generally expect that the downstream equipment operating rate may be declining. The downstream demand is not optimistic. Comprehensive analysis, the market is now affected by the negative atmosphere, the demand is not good, and the cost is moving downward. It is expected that the styrene market will fall in a shock.

Translated by Google Translator from http://www.cria.org.cn/newsdetail/48277.html

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