On Sept 8, Houthi forces attacked Saudi oil facilities and the US-Iran military conflict continued, pushing international oil prices up on supply risks. NYMEX crude oil futures for October delivery rose by $1.55/bbl to $93.03, up 1.69% from the previous trading day; ICE Brent futures for November delivery rose by $0.92/bbl to $97.92, up 0.95%. China INE crude oil futures for the 2610 contract rose 14.8 to 703.3 yuan/bbl and gained another 11.4 to 714.7 yuan/bbl in the night session.
On the 8th, escalating tensions in the Middle East drove crude oil sharply higher. Trading in the Asian styrene US dollar market was moderate, and RMB-denominated prices rose significantly in the afternoon, lifting the Asian market into the close. FOB Korea closed at $1,348-1,358/mt, with the average up $33/mt; CFR China closed at $1,308-1,318/mt, with the average up $23/mt. Unit: USD/ton.
On the 8th, theoretically compared with the previous trading day: the theoretical production-to-sales profit for integrated enterprises increased by RMB 1/ton to RMB 1,860/ton; the theoretical production-to-sales loss for non-integrated enterprises narrowed by RMB 107/ton to RMB -496/ton.
Core logic: The recent market game is focused on the tug-of-war between firm crude oil, low inventories and downstream output cuts. In the short term, the styrene market is likely to remain high and firm. Given expectations of supply recovery in September and widening downstream losses, the direction of continued month-spread narrowing cannot be ruled out.
| Product | Region | Sep 7 | Sep 8 | Change |
|---|---|---|---|---|
| Crude Oil | Brent Oct Contract | 97 | 97.92 | +0.92 |
| Ethylene | CFR Northeast Asia | 1105 | 1150 | +45 |
| Benzene | East China Market | 9020 | 9100 | +80 |
| Styrene | Jiangsu Market | 10020 | 10075 | +55 |
| Remarks: | ||||
| 1. Brent crude oil: USD/bbl; CFR Northeast Asia ethylene: USD/ton; benzene and styrene: RMB/ton. | ||||
| 2. Benzene and styrene prices are the closing average prices of their mainstream markets. | ||||
| 3. RMB prices in the table above are spot-exchange, tax-inclusive prices. | ||||
| 4. The change rate is calculated on a period-over-period basis. |
Styrene: The recent market game centers on the capital battle among firm crude oil, low inventories and downstream output cuts. Houthi attacks on Saudi oil facilities and the continued US-Iran military conflict have pushed international oil prices higher on supply risks. Anqing Petrochemical is under turnaround, Jingbo's unit is being restarted, and Lihuayi's restart may be brought forward, leaving the industry with expectations of a marginal supply recovery. The price spread between styrene and downstream products has narrowed, and downstream operating rates have been cut back due to this negative feedback. However, before absolute inventories accumulate effectively, the tight spot supply pattern will be difficult to fundamentally reverse. In the short term, the styrene market is likely to remain firm at high levels. Given expectations of supply recovery in September and widening downstream losses, the possibility of the month spread continuing to narrow cannot be ruled out.
| Data Type | Previous Data | Current Data | Change Rate | Expectation |
|---|---|---|---|---|
| Jiangsu Port Inventory | 3.98 | 3.73 | -6.28% | ↘ |
| South China Port Inventory | 1.6 | 1.55 | -3.13% | ↘ |
| Operating Rate | 62.58% | 63.27% | +0.69% | ↗ |
| Sample Enterprise Inventory | 16.44 | 14.43 | -12.23% | ↘ |
| Remarks: | ||||
| 1. The data in the table are all weekly styrene data; ↘ indicates a downward expectation and ↗ indicates an upward expectation. | ||||
| 2. Styrene Jiangsu port inventory is released before 15:00 on Monday of the current week. | ||||
| 3. Styrene East China port inventory is released before 17:00 on Monday of the current week. | ||||
| 4. Styrene operating rate is released before 18:00 on Thursday of the current week. | ||||
| 5. Styrene sample enterprise inventory is released before 17:00 on Thursday of the current week. |
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