[Introduction]: Since March, affected by geopolitical factors, the styrene market price has seen a significant rally. Subsequently, due to persistently weak spot demand and despite some support from export demand, the destocking pace at ports fell short of expectations, and the market gradually returned to rationality. However, entering mid-to-late May, prices stopped rising and turned downward, showing a volatile decline. After June, the decline further expanded.
Since the escalation of the Middle East situation, the styrene market only saw a phased rise from March to April, with prices once breaking through the 12,000 yuan/ton mark. However, the upward trend did not last. After mid-May, as expectations for US-Iran peace talks warmed, the upside space for international crude oil was suppressed, cost-side support gradually loosened, and the supply-demand contradictions of styrene itself became prominent, causing the market to enter a volatile downward channel. This week, the average profit of China's non-integrated styrene units was -130 yuan/ton, down 134 yuan/ton from last week, a month-on-month decrease of 3258.39%. The average weekly profit continued to decline, showing an overall downward trend. Industry profitability has significantly deteriorated, highlighting the production pressure on non-integrated units.
From the performance of major downstream styrene sectors, in the past 7 days, the domestic consumption of main downstream styrene products recorded 241,300 tons, a slight increase from the previous period, with rigid demand for styrene showing a moderate improvement trend. On the supply side, due to domestic unit maintenance and load reduction, domestic supply has decreased; at the same time, the import market lacks effective replenishment, and overall supply is contracting. From a supply-demand balance perspective, the styrene market in June shows a pattern of supply slightly lower than demand, with the supply-demand gap remaining negative, and the negative gap narrowing compared to the previous period. However, despite the marginal improvement in apparent supply-demand relations, downstream actual spot procurement demand remains weak, coupled with the negative cost impact from falling feedstock prices, the overall styrene market price remains under pressure and continues to decline.
Although US-Iran relations remain uncertain and supply risk concerns have risen, crude oil overall showed a slight volatile decline in June, with weak production cost performance, which was bearish for market sentiment. Styrene supply experienced minor fluctuations; this week, production enterprises successively lowered prices. On the downstream side, the recovery of rigid demand is limited, spot procurement demand remains poor, and overall demand is sluggish. Market sentiment is bearish, with more declines than rises, and overall volatile downward movement. It is expected that the styrene market will show a pattern of first strengthening and then weakening, with the weekly average price possibly rising slightly. From the current news perspective, geopolitical risks in the Middle East are still fermenting; the closure of the Strait of Hormuz may push up crude oil prices; pure benzene may rebound after falling, and the probability of a rebound in the cost side after continuous declines has increased, providing some boost to market sentiment. In terms of supply and demand, short-term domestic supply is expected to increase slightly; major downstream rigid demand still provides support, shipments and deliveries remain stable, while spot demand expectations are still poor. Overall theoretical supply is slightly lower than demand. Combining various factors, it is expected that the styrene market will consolidate with a first-strong-then-weak pattern in the next period.
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