Recently, there are many uncertain factors in the international crude oil market on the cost side, and the price fluctuates violently. However, from the perspective of styrene fundamentals, the spot market has strong support for the disk. In the near future, the spot market of styrene has increased greatly. In the later stage, the major styrene plants have maintenance expectations, and the downstream high-speed construction will continue. This will boost the price in the short term due to the reduction of styrene import caused by the maintenance of foreign refineries. However, it is still necessary to guard against the international macro risks. The profits in the early stage of the market have been gradually digested. In the medium and long term, the tight supply pattern will be eased More orders need to guard against the risk of callback.
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1、 Analysis on spot market of styrene
Figure 1: spot market price of styrene (unit: yuan / ton)
Since the beginning of October, the spot price of styrene has increased significantly, and is currently maintained at 7400-7800 yuan / ton. In the past week, the average price of East China market was 7406 yuan / ton, last week’s average price was 6639 yuan / ton, a month on month increase of 11.55%; the average price of South China market was 7900 yuan / ton, last week’s average price was 6895 yuan / ton, a month on month increase of 14.58%; the average price of North China market was 7522 yuan / ton, last week’s average price was 6665 yuan / ton, with a month on month increase of 12.86%. From the international market point of view, the Asian styrene market as a whole shows a rising trend. On the one hand, due to the unexpected failure of some styrene plants in Rita, Korea, the production reduction or short-term shutdown, the market supply further reduced; on the other hand, China’s styrene inventory continued to decline. The European and American markets also showed a rising trend in prices. As the Asian market rose sharply, arbitrage drove the European market higher. At the same time, the United States expected to have a positive economic stimulus policy, and the styrene plant production reduction played a part of the supporting role.
Figure 2: Trend of inter term spread of styrene (unit: yuan / ton)
Figure 3: Trend of styrene basis difference (unit: yuan / ton)
In the near future, the future price of styrene continues to rise, and the basic demand is strong. As of November 09, the main eb2101 contract closed at 7391 yuan / ton, and the price difference between the main eb2101 contract and 2102 contract was 501 yuan / ton, which was stronger in recent months than in far months. In terms of basis, due to the fundamental support for the spot market, the spot price performance was strong. Under the effective support, the basis strengthened significantly from the middle of October, and the basis structure has changed from negative to positive. As of November 09, the basis of the main eb2101 contract against the mainstream price of the East China market was 164 yuan / ton, and that of the mainstream price of the South China market was 759 yuan / ton.
2、 Supply and demand analysis of Styrene Market
Figure 4: cost and profit of styrene (unit: yuan / ton)
Figure 4: styrene and downstream operation (unit:%)
In the near future, the increase of styrene is clearly stronger than that of raw materials, and the profit of styrene factory turns better. According to Longzhong statistics, as of November 06, the raw material of pure benzene was listed at 3750 yuan / ton, up 150 yuan / ton compared with the end of October; ethylene price was 740 US dollars / ton, down 50 US dollars / ton compared with the end of October; the cost of non integrated unit was around 5445.8 yuan / ton, increased by 8.17 yuan / ton compared with the end of October; styrene price was 7670 yuan / ton, increased by 910 yuan / ton compared with the end of October, and the profit margin of non integrated device was It was around 2224.2 yuan / ton, 901.83 yuan / ton higher than the theoretical value at the end of October.
In terms of downstream demand, the three downstream still maintain high opening rate, and the high operating situation of PS industry is expected to continue for a longer time. Styrene just needs strong support, enterprise production and marketing profits are expanding, and the main downstream production and marketing profits are still considerable. According to Longzhong information statistics, as of November 06, the weekly output of domestic PS industry was 63100 tons, the operating rate was 84.69%, an increase of 0.56% over last week, and the profit margin was in the range of 1530-1715 yuan / ton. The total weekly output of ABS industry in China is 80600 tons, and the industry operating rate is 99%. The average gross profit of domestic ABS was 6161 yuan / ton, up 274 yuan / ton, or 4.7%. The weekly output of domestic EPS is about 90000 tons, the unit operating rate is about 75.87%, and the month on month decrease is 2.73%. Some factories are close to full capacity production.
Figure 6: domestic styrene plant inventory (unit: ton)
At present, the total inventory of domestic styrene plants decreased significantly. Recently, most factories in East China showed a decline in inventory, which was relatively low. In terms of social inventory, the total stock of styrene in the mainstream reservoir area of South China is 27500 tons, with a decrease of 5000 tons on a month on month basis; there are 15400 tons of commodities in the main reservoir area of South China, with a decrease of 12000 tons on a month on month basis. At present, the total stock of Jiangsu social inventory is 203800 tons, with a month on month decrease of 33500 tons; there are 184800 tons of goods in Jiangsu, with a month on month decrease of 32500 tons. On the whole, the inventory of styrene enterprises and social inventory all kept declining, and it is expected that the arrival of goods at terminals in the future market will decrease.
3、 Post market logic of styrene
There are still many uncertain factors in the international crude oil market on the cost side, and the fluctuation risk is high. However, at present, the strong performance of styrene fundamentals, improved supply and demand, tight supply of goods at the spot end, pushed up the spot market and supported the disk surface. At the same time, there were favorable incentives such as unexpected short-term stoppage of devices at home and abroad, as well as the decline of import and export volume. In the short term, styrene may maintain strong operation. In the long run, the import of styrene in late December is expected to pick up, and there is still a production capacity plan for domestic styrene in 2021, so the spot shortage pattern will be gradually eased. Relative high value of styrene and other relative risks need to be cautious.
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