CICC Wealth Futures: The Middle East war has led to tight supply of pure benzene, and styrene costs are rising.

In the second quarter, styrene production units entered a period of centralized maintenance, while downstream three major S-profit margins were compressed, forcing reductions in production and lowering of capacity. The fundamentals of styrene itself are marginally weakening in supply and demand. Due to the continued blockage of navigation through the Strait of Hormuz, Asian refineries have reduced their operating loads by 10-40%, leading to a significant decline in both domestic and imported pure benzene supplies. Rough estimates suggest that unplanned crude benzene production cuts amount to about 80k tons, with monthly import volumes reduced to below 380k tons. Domestic hydrogenated benzene production has some room for increase but cannot fully offset the supply gap. Therefore, this Middle East conflict has fundamentally changed the previously loose supply pattern of pure benzene, significantly increasing costs and transmitting this upward pressure to the styrene segment. Overall, at this stage, styrene prices are still primarily driven by cost-based pricing logic, and close attention should be paid to the evolving geopolitical situation in the Middle East and crude oil price trends. (CICC Wealth Futures)