Styrene Monomer: Capacity Expanding and Prices Rising   

By Liang Yulong, CCR Consulting Dept.   

1. China's capacity to produce styrene monomer is growing rapidly, driving its self-sufficiency rate to rise.

As of the end of 2009, China's installed styrene monomer capacity had reached 4.7 million t/a, up 51.6% year on year. In 2009, China's new styrene monomer capacity amounted to 1.6 million t/a, including Tianjin Dagu Chemical Co., Ltd.'s 500 000 t/a (trial production in December 2009, then normal production from January 2010), Panjin Ethylene Industry Corporation's 150 000 t/a, PetroChina Dushanzi Petrochemical Company's 320 000 t/a, Shandong Yuhuang Chemical Co., Ltd.'s 200 000 t/a (put into production on December 15th, 2009, and producing styrene monomer directly from ethanol CCR2009No.36), Shandong Huaxing Group's 80 000 t/a (put into production on September 11th, 2009), Sinopec Anqing Petrochemical Company's 100 000 t/a (put into production on September 19th, 2009, (CCR2009 NO.29), PetroChina Daqing Petrochemical Company's 100 000 t/a (on November 6th, 2009), and Shanghai Secco Petrochemical Co., Ltd.'s 150 000 t/a. In 2010, several new styrene monomer units will be put into production, including units of Shandong Hengyuan Petrochemical Company Limited, Sinopec Zhenhai Refining & Chemical Company and CNOOC & Shell Petrochemical Co., Ltd.

China's top ten styrene producers in 2009
  (thousand t/a)
Company                                Capacity
Shanghai Secco Petrochemical Co., Ltd.    650
CNOOC and Shell Petrochemical Co., Ltd.    560
Tianjin Dagu Chemical Co., Ltd.         500
Shuangliang Leasty Chemical Co., Ltd.    420
  (former Shuangliang Lishide Co., Ltd.)
PetroChina Dushanzi Petrochemical Company    320
Changzhou Donghao Chemical Co., Ltd.    210
Sinopec Qilu Petrochemical Company      200
Shandong Yuhuang Chemical Co., Ltd .    200
PetroChina Daqing Petrochemical Company    190
Panjin Ethylene Industry Corporation    150
Source: CCR Consulting Dept

   With the rapid expansion, China is also gradually reducing its dependence on imported styrene monomer and shifting to a self-supply pattern, and China's share of the world's styrene monomer capacity is also steadily increasing. In 2000, China's styrene monomer capacity was only 880 000 t/a, but by 2010, it surged to 4.7 million t/a. China's self-sufficiency rate of styrene monomer also rose from 20% in 2000 to 47% in 2006. The rise of crude oil prices in the first half of 2008 and the economic recession in the second half of 2008 resulted in a decline in the operating rate of China's styrene units. In 2008, China's self-sufficiency rate of styrene was lower than in the previous four years. As for downstream consumption, makers of expandable polystyrene (EPS), polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) together contributed 79% of the total. The development speed of ABS and unsaturated polyester resin (UPR) is relatively higher than other consumers, but the overall consumption pattern of styrene monomer will not change significantly in the short term.

Statistics of styrene supply and demand in China in recent years
Year    Capacity     Output     Import     Export    Consumption    Self-sufficiency rate
   thousand t/a    thousand t    thousand t    thousand t    thousand t    %
2006    2 680     2 166    2 343.0     5.9     4 503.1     48.10
2007    3 120     2 282     3 101.5     0.2     5 383.1     42.39
2008    3 200    1 950     2 810.8     2.1     4 758.7     40.97
2009    4 700    2 550    3 645.8     7.9     6 187.9     41.2
Source: CCR Consulting Dept.


2. Styrene monomer prices rose in a fluctuating way in 2009

Since the outbreak of the global financial crisis, China's styrene monomer industry has been heavily hit. End users have to cut back production or close down. The demand for styrene monomer declined rapidly, and the prices dropped from RMB10 000/ t to about RMB4 300/t. Later, with the execution of various economic stimulus programs of China and other countries, the styrene monomer market has started to recover gradually since early 2009. In 2009, affected by the ups and downs of international crude oil and styrene monomer prices, the price of styrene monomer in China also fluctuated and was even as high as RMB9 000/t.
   In the first quarter of 2009, the impact of the global economic crisis was the most severe since its outbreak. Most businesses had not recovered from the panic of the economic crisis. Combined with a long Chinese New Year holiday, uncertain factors increased. Businesses were generally careful to avoid risks. But in January, because crude oil prices picked up, styrene monomer prices in Asia rose rapidly. In East China, the price of styrene monomer rose from RMB4 900/t in January up to RMB8 500/t in late March, increasing by RMB3 600/t in the first quarter.
   In the second quarter of 2009: Styrene prices in China fluctuated in an N-shaped way. In early April, the price of styrene monomer rose close to RMB9 000/t, mainly because the styrene monomer plant of Sinopec Qilu Petrochemical Company stop production for a 15-day overhaul since April 15th, resulting in a short supply of styrene monomer. But in mid-May, it soon fell back to about RMB7 400/t. In June, it rose again. In late May, the international price of crude oil rose to US$72.68/barrel, and the international price of styrene monomer also rose substantially, resulting in an increase in styrene monomer prices in China's domestic market to varying degrees. By mid-June, the price of styrene monomer rose to about RMB8 450/t in China. Domestic styrene monomer producers frequently raised the prices of their products. But the weak demand for styrene monomer brought the climbing prices to a stop.
   In the third quarter of 2009, China's styrene monomer prices fluctuated along with international crude oil prices. In July, it hovered between RMB8 300/t and RMB8 900/ t. In August, it once reached RMB9 300/t due to the push of international crude oil and styrene monomer prices. In early September, it began to decline mainly due to a weak demand, appreciating US dollar, the fall of oil prices, the coming of a long holiday and an increase in panic selling. In addition, traders tried to keep the price of styrene monomer down to supplement their inventories at a lower cost. This also contributed to the fall of the styrene monomer price.
   In the fourth quarter of 2009, ten months later, driven by the constant rise of benzene prices and international styrene monome