By Cui Jing, JLC

Wide downstream applications

Four main downstream sectors consumed 68% of styrene last year in China, down three percentage points YoY– more specifically, EPS accounting for 24.9%,ABS20.4%,GPPS14.2% and HIPS8.3%. UPRtook up 5.5%, and proportions of SBR, SBL and SBC were all less than 3%. The remaining 19% was absorbed by other sectors like styrene-acrylic emulsion, MBS, pharmaceuticals, dyes and pesticides. See Figure 1 for details.

Figure 1 China’s consumption structure of styrene in 2020

Increasing self-sufficiency rates

New styrene capacities pushed up domestic output, rising around 11% annually during 2016-2018, up more than 15% annually during 2019-2020, and reaching 9.72 million tons in 2020, when the average production per month exceeded 800 000 tons. Output, self-sufficiency rates and apparent consumption all increased from 2016 to 2020, while import volume showed a downward trend. See Figure 2 for details.

Figure 2 Supply and demand of styrene in China during 2016-2020

China’s apparent consumption of styrene was 12.6 million tons in 2020, with an average annual growth of 7% during 2016-2020, far lower thanoutput growth, whichnarroweddown supply gap and increased self-sufficiency rate to77.31% in 2020 from 62.7% in 2016.

Import volume of styrene fell to below 2.83 million tons in 2020, mainly because of: 1) surging domestic output spurred by new capacities; 2) tightening international supply as some foreign enterprises conducted equipment overhaul.

Factors affecting prices

Styrene prices in east China were RMB7 000-11 000/t in 2016, RMB8 200-12 000/t in 2017, RMB7 700-14 000/t in 2018, RMB7 100-9 400/t in 2019 and RMB4 200-10 000/t in 2020. See Figure 3 for details.

Figure 3 Styrene prices in east China during 2016-2021

In the fourth quarter of 2020, styrene prices in east China skyrocketed due to factors likeplummeting inventory atmain ports, high operating rates in major downstream sectors and decreasing international supply (caused by equipment overhaul at some international companies), with spot prices in this area reaching around RMB10 000/t by November 16, 2020. Some downstream industries could hardly bear such cost pressure, hence the production reduction or suspension. In addition, equipment overhaul gradually came to an end. By the end of December 2020, styrene spot prices in east China dropped to RMB6 200-6 500/t, but near the end of February 2021, once again soared to around RMB10 000/t partly attributable to surging international crude prices, and have declined since March to current RMB8 000-8 500/t.

Rapid capacity expansion in 2021

Many new styrene units will be put into operation in 2021, including units of Sinochem Quanzhou Petrochemical Co., Ltd., CNOOC and Shell Petrochemicals Co., Ltd., Zhejiang Petrochem and Chemical Co., Ltd., etc. Output increase will lag behind styrene capacity growth, which far exceeds pace of capacity expansion in downstream sectors.

Remaining in transition to excess supply, China’s styrene market will maintain balance between supply and demand for some time to come. Besides international crude prices, other main factors affecting styrene prices include upstream costs, equipment operation, import volume, new capacities, port inventory and downstream demand.