CICC Wealth Futures: The main drivers of future styrene will be cost support and export dividends.

The outbreak of war between Iran and the United States and the closure of the Strait of Hormuz for over a month have widely spilled over to Asian refineries. In the short term, the impact on China’s pure benzene-styrene industry chain is reflected in reduced pure benzene supply and increased styrene exports. Specifically, domestically, due to raw material supply issues, the number of pure benzene plant maintenance and early maintenance periods have increased; there have been no unplanned maintenance cases for styrene yet, but upstream ethylene prices have surged significantly, forcing some units to operate at reduced loads. However, price increases in the upstream and midstream segments are difficult to smoothly transmit downstream. The closer to the end-user, the more resistant to high prices. After the initial panic-driven inventory buildup phase ends, manufacturers tend to adopt a cautious wait-and-see approach. Therefore, in the future, the main drivers of styrene prices will be cost support and export benefits. The negative feedback is temporarily unlikely to change the strong market trend. Until the Strait of Hormuz resumes navigation, the main trading conflicts will still focus on the supply side. (CICC Wealth Futures)