CICC Wealth Futures: The styrene market shows a range-bound, slightly weak trend

The styrene market is exhibiting range-bound trading with a slightly weak bias. Due to marginally looser supply and deeply weak domestic demand, the bulls-and-bears game is temporarily favoring the bears, and the market’s wait-and-see sentiment has further intensified. As of mid-to-late April, the overall operating rate of the domestic styrene industry was 74.2%, up slightly month-on-month. Previously shut-down units were restarted one after another, and with the originally scheduled spring-maintenance units postponed, the marginal supply in the short term has shifted toward looseness, and the amount of freely circulating cargoes in the market has increased. The operating rates of EPS, PS, and ABS were 43.1%, 44.8%, and 58.9%, respectively, continuing to fall month-on-month. The recovery of end-market consumption is far below expectations. Downstream industries are suffering widespread losses from cost inversion, and the downward transmission of high-priced raw materials has completely failed. Manufacturers follow just-need small-quantity purchasing, and actively cut production and reduce operating load to stop losses; their resistance to price increases has reached a peak, and this negative feedback continues to weigh on the styrene futures market. However, at the moment, the styrene–pure benzene price spread is at its current level, which limits the downside room for styrene prices, but in the short term there is no sufficient upward catalyst. Going forward, key focus should be on the situation in the Strait of Hormuz, the concentrated turnaround maintenance of styrene units in May, and the continued follow-through of increased export volumes. (CICC Wealth Futures)