Will styrene market prices reach an all-time low again?

Methanol market analysis

Just last week, Flathead analyzed the article that the methanol market is about to hit a record low, " Methanol price will hit a record low again?", interested can click to browse.

Flathead believes that the current operating logic of the chemical market has subverted the core logic of the value chain. The weakness of crude oil and the downturn in the consumer market, as well as the bearish impact of the peripheral market, are seriously affecting China's chemical enterprises. The poor economy and poor consumer market are the main bearish effects of the current chemical market. Under such circumstances, the prices of many chemical products in China have continued to decline, and some products have reached the lowest price in history.

Styrene market price analysis

According to relevant data, the price of styrene in China has fallen for nearly 12 consecutive months from June 2022 to May 2023, from the previous high of 11,057 yuan/ton to the current 7700 yuan/ton, a decline of about 30%. The decline in the past year has led to the Chinese styrene market hitting a recent low in a row.

Regarding the reasons for the decline in styrene, information companies have analyzed in relative detail, such as the high domestic supply, the sluggish consumer market, and the lack of crude oil cost support. At present, the industry is more concerned about how long this decline can last? What level can the minimum price reach?

Analysis of historical price fluctuations

According to the average price fluctuation of styrene in China in the past 17 years, the overall styrene market in China has maintained a wide range of fluctuations in the past 17 years, with fluctuations ranging from 6850 yuan/ton to 13,800 yuan/ton, of which there have been at least four historical lows, namely 4540 yuan/year in 2008, 6825 yuan/ton in 2015, and 4867 yuan/ton in 2020. Judging from the time of the lowest point, the average time interval is about 5 years.

Judging from the trend of the past 17 years, the current price of styrene at 7,700 yuan/ton has not reached the lowest point in history. According to the long-term historical trend, the lowest point in history should be 4,500 yuan/ton, and there is still a gap of 3,200 yuan/ton.

Seasonal fluctuations

If styrene has a seasonal fluctuation law, it can be analyzed by the monthly average price fluctuation. According to the year-on-year change rate of the monthly average price of styrene in China in 5-7 over the past 15 years, the year-on-year change rate fell in 8 years, accounting for about 53% of the total year, and the year-on-year change rate rose in 7 years. That is to say, in the May-July period of each year, the probability that the year-on-year change rate of styrene benchmark price in China will exceed half will decline, and the possibility of year-on-year decline is even greater.

Future price forecast

If the price trend in the past year is regarded as a volatile downward trend, then the current price has fallen to the low point in December 2022, which is the low point of the latest downward trend. Flathead believes that if the styrene market does not rise in the short term, then this decline will once again hit a record low in the last year. According to the price difference between August 2022 and December 2022, it is expected that the low point of this decline will be around 6,900 yuan/ton. However, if the styrene market wants to hit the lowest point in the past 17 years, unless the chemical market continues to spread in this round of large-scale decline, and the market is bearish. After all, there is still a gap of more than 3,000 yuan/ton from the historical low of 4550 yuan/ton.

The impact of styrene price fluctuations on the industrial chain

Styrene market price fluctuations directly determine the value fluctuation of the styrene industry chain, such as PS, EPS, ABS and other rubber varieties. The decline in styrene prices this time is not large compared to other chemical products. It is one of the more resistant products, but the only concern in the industry is how long it can fall this time. Judging from the historical trend, market supply and demand relationship and price decline expectations, it is almost unlikely that the styrene price will reach a historical low this time. The more likely fluctuation range is 6600-7600 yuan/ton.