Styrene futures prices are rising, can the rise continue?
Since the beginning of April, major oil-producing countries have released signals to cut production, and the market expects oil prices to rise. Superimposed styrene futures have gradually transferred to 2009 contracts. Based on expectations of rising forward oil prices and improving demand, both styrene futures and cash markets have seen bottom fishing actions. Styrene prices have gradually risen, production enterprises have arranged goods smoothly, and downstream enterprises and traders have increased their willingness to receive goods. The industrial chain seems to be a positive cycle, but this positive cycle is not based on the improvement of the current rigid demand of entities, but on the expectation of rising oil prices. If oil prices fall back, the state of simultaneous increases in spot prices may not be sustainable.
Cost expected to "U" bottom
The listing price of pure benzene in Sinopec Group has been raised. Pure benzene is a by-product of refineries. Under low oil prices, the willingness of refineries to start work has increased significantly. Since March, the domestic petroleum benzene operating rate has increased from 62% to 75%, and the supply of petroleum benzene has increased significantly. Although the domestic hydrobenzene operating rate has declined, the increase in petroleum benzene production can make up for the loss of hydrobenzene production and drive a net increase in domestic pure benzene supply. In addition, affected by foreign epidemics, overseas sources have flowed into coastal areas, and import shocks have strengthened. Under the sluggish demand, as of April 8, the inventory of pure benzene in the main port of East China has climbed to 131,000 tons, and it is still in the accumulated warehouse. It is expected that the main Under the negative impact, the listing price of Sinopec Group pure benzene was once reduced to 2,300 yuan/ton on April 2. Recently, international oil prices rose, and the demand for speculative stocking in the industrial chain was driven. The listing price of Sinopec Group pure benzene rose to 2,900 yuan/ton.
Ethylene is still bottoming out. Although most of the energy and chemical products have bottomed out recently boosted by oil prices, refineries are operating at high load under low oil prices, naphtha supply is still increasing, prices are low, and ethylene and naphtha are falling. However, considering that crude oil is gradually bottoming out, the price difference between ethylene and naphtha is narrowing, and it is expected that there is limited room for further decline in ethylene prices in the later stage.
Combined with the price trend of pure benzene and ethylene, we believe that the cost side of styrene is gradually bottoming in the near future, but considering the poor demand at the end point of the petrochemical industry chain, it is expected that the cost side of styrene will bottom "U", and the probability of "V" rise is small.
Supply has increased pressure
Since the beginning of April, the profit of styrene production has turned into a profit. As of April 9, the profit of styrene production was 300 yuan/ton, and the cash flow of styrene production enterprises has improved significantly. At present, the operating rate of styrene is 68.8%, which is relatively low. With the recent significant improvement in the production profit of styrene plants, the demand for speculative stocking downstream has increased, the production enterprises have arranged goods more smoothly, and the inventory pressure has eased. It is expected that the operating rate of styrene will gradually increase in the near future, and the supply will increase in the later stage.
Downstream construction resumes one after another, but end point demand is poor
Under the call of the state to "actively resume work and production", as of April 9, the operating rate of PS, ABS and EPS downstream of styrene rebounded to 65.7%, 83.74% and 65% respectively. Specifically, the recent EPS operating rate has rebounded significantly. This is due to the recovery of demand in the northern plate market since the beginning of April, the phased replenishment of end points, and the volume of EPS orders is obvious. PS operating rate has also basically rebounded to the normal level in the previous period. With the rise in crude oil prices, under the psychology of buying up rather than buying down, PS downstream enterprises have hoarded a lot of goods, and speculative demand has led to a recovery in PS operating rate. However, the current ABS operating rate has not yet rebounded to the previous normal level, this is due to the epidemic in Europe and the United States is still more serious, some downstream export enterprises have received the notice of delayed delivery from foreign customers, new orders have dropped sharply, enterprise shipments have been blocked, forced to low load operation.
As far as the current downstream situation is concerned, in addition to the recovery of demand in the North of EPS, the rigid demand of PS and ABS entities has not yet recovered, and it is mostly a phased speculative stocking demand. If there is no substantial increase in end point orders in the later stage, the speculative stocking demand will gradually decrease, and the sustainability of styrene demand growth is in doubt.
Main port inventory decreases slightly
As of April 8, the inventory of styrene in the main port of East China was 314,500 tons, down 1.4% month-on-month; the trade inventory was 206,100 tons, up 1.3% month-on-month. At present, there are signs of slight destocking in the main port of East China, which is also the main reason for the current boost in futures prices, but we believe that the extent of destocking may not be as good as in previous years. There are two main reasons for the destocking of ports in the second quarter of previous years: first, the second quarter is often the peak season for the maintenance of styrene plants at home and abroad, the supply of imported goods is reduced, and the market is stocking up in advance; second, under the "gold three silver four", the downstream start-up has generally returned to normal levels, and the demand is strong. Therefore, in the context of strong supply and demand, styrene will achieve a significant round of destoc However, the current domestic styrene plant load has reached a low level, and there is little room for further decline. Stimulated by the recent high profits, there will be a negative trend in the later stage, and the supply will increase. At present, the demand for styrene is still dominated by speculative stocking demand. Due to the poor export orders of home appliances and electronic appliances, the end point demand has not seen a real improvement. After the stage of speculative stocking demand, the willingness of downstream styrene enterprises to receive goods may decrease. Therefore, we believe that the current supply and demand of styrene is not as good as in previous years, and the port dewarehousing will be weak. It is expected that the port inventory is expected to drop to around 250,000 tons in April-May, but such inventory levels are still at a high level.
At the same time, it should be noted that styrene is a liquid chemical. As the temperature rises, it should not be stored in large quantities or for a long time. Otherwise, it is easy to cause polymerization reactions, resulting in excessive polymer content and affecting quality. Therefore, if the supply increases later, it is necessary to be vigilant against the occurrence of market price reduction and dumping.
To sum up, the recent bottoming of crude oil has led to the strengthening of styrene. The strengthening of crude oil prices will increase the production cost of styrene on the one hand; on the other hand, it will boost the bottom fishing mentality of the industrial chain, and the willingness to receive goods downstream will increase. The styrene factory arranges goods smoothly, and the port inventory is at an initial inflection point. However, we believe that the current rise in styrene is more affected by the expected rise in crude oil in the far month. At present, end point orders have not seen significant improvement. There is an expectation of an increase in supply in the later stage. The intensity of port dewarehousing will not be as good as in previous years, and the pressure of high inventory cannot be resolved. With the increase in temperature, it is necessary to be vigilant for the occurrence of later dumping phenomenon. It is expected that the recent rise in styrene futures prices will weak
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