On June 26, the “China Plastic Industry Congress 2019″ sponsored by Dalian Commodity Exchange was held in Hangzhou. The theme of the Congress is “Innovating Industry Services and Promoting the Combination of Industry and Finance”. As a promising chemical product in the market this year, the related situation of styrene is noticeable. At the meeting, Li Guodong, deputy manager of Organic Chemistry Department of East China Branch of Sinopec Chemical Sales Co., Ltd., shared the current market situation of styrene.
Adrian Li
From 2014 to 2018, domestic styrene production increased from 6.95 million tons to 9.21 million tons, an increase of 32.5%. In terms of apparent consumption, domestic apparent consumption was 8.42 million tons in 2014, and increased by 2.6 million tons to 1.12 million tons in 2018, an increase of 30.9%. The growth of production capacity and consumption is basically the same. The starting rate has increased year by year, from 67.48% in 2014 to 88.06% in 2018.
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According to enterprises, Petrochemical accounts for 25% of the production capacity of styrene, petroleum accounts for 14%, private enterprises account for 29%, and other state-owned enterprises account for 16%. Regionally, the largest proportion of styrene production capacity is 43% in East China, 23% in North China, 14% in South China and 12% in Northeast China.
On the import side, the import volume of styrene declined year by year, and the import dependence decreased to 26% in 2018. Specifically, between 2014 and 2017, Korea’s supply of goods accounted for 32% to 38% of the total domestic imports. Since June 23, 2018, anti-dumping duties on imported styrene originating in Korea, Taiwan and the United States have been imposed, with tariffs ranging from 3.8% to 55.7%. Affected by this, in 2018, South Korea’s share of goods fell to 12%, while the United States’share of goods fell to 4.6%.
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From the downstream consumption situation, the main downstream industries are EPS, PS, ABS. The total number of customers is only 70, and the production capacity is mainly concentrated in the top five enterprises in the industry. The start-up rate of downstream industries is not high except ABS, 41%-71%.
In terms of price trend, Li Guodong Introductory, looking at the Jiangsu Styrene Market in the past five years, the price range in 2014 is 6400-12100 yuan/ton, 6600-11200 yuan/ton in 2015, 7700-10900 yuan/ton in 2016, 8180-12000 yuan/ton in 2017 and 7750-14000 yuan/ton in 2018. CFR China and domestic styrene price trends are consistent, styrene and the main raw material pure phenyl benzol are highly synchronized.
| PVA 0599 (PVA BF05) |
“In recent years, the styrene industry has maintained a good profit margin. In 2018, the styrene industry maintained a high profit throughout the year, especially in May-June, the profit remained in 2000-4000 yuan/ton. Li Guodong said that there are two main reasons for the high profits in 2018. The first is the shrinkage of both import and domestic sources, the tight domestic spot, the misjudgment of anti-dumping and the external operating environment in the industry, and the low inventory operation in East China’s main port for a long time. Secondly, in terms of main raw materials, pure benzene operates at a low level all year round, and ethylene has been falling all the way.
From 2016 to 2019, the inventory data of the main ports of styrene in East China are much lower than that of the same period in previous years in the first and third quarters of 2018. According to Zhuo Chuang’s statistics, on June 6, inventory in East China’s main port fell to 206,000 tons and commodity inventory to 123,000 tons, which meant that the market’s available spot volume was almost exhausted. Inventories rebounded sharply in the fourth quarter of 2018. On March 18, 2019, stocks reached an all-time high of 350,500 tons.
“In the next five years, the styrene market will change from the seller’s market to the buyer’s market, and the era of industry-wide profitability will come to an end.” Li Guodong said that with the start-up of Zhejiang Petrochemical’s 1.2 million tons by the end of 2019 and the start-up of Zhonghai Shell, Sinochem Quanzhou and Gulei Petrochemical Plant in 2020, the domestic supply and demand pattern will change dramatically and the import volume will decrease dramatically. After 2020, the pattern of styrene trade in Northeast Asia will change fundamentally.