By Wang Yuying, Li Zikun

Production situation analysis and forecast

China's styrene production maintained a robust growth trend in 2022. Throughout the year, there were a total of four styrene units completed and put into operation, and one unit expanded its capacity, with a newly-added capacity of 2.23 million t/a in total (see Table 1). By the end of 2022, China's styrene production capacity increased to 17.636 million t/a, a year-on-year increase of 14.47%. China’s styrene units mainly adopt ethylbenzene dehydrogenation technology, propylene oxide/styrenemonomer (PO/SM) co-production technology and cracking gasoline extraction (also known as C8 extraction) technology, accounting for 72.89%, 25.74% and 1.37% respectively. The PO/SM co-production technology, benefiting from the cost advantage of co-production, has gained increasing popularity among manufacturers, resulting in an increased share of production capacity. The production capacity and technology of China’s styrene manufacturers in 2022 are shown in Table 2.

In 2022, China's styrene had a total output of 13.5604 million tons, an increase of 11.44% year-on-year. However, the capacity utilization rate saw a decrease of 2.32%, settling at approximately 76.89%. The primary reason for the output increase was the stable start of new production capacity and the recovery of demand. The decline in capacity utilization tends to be normal because the industry profits have shrunk under the influence of rising raw material prices, and the new capacity has been put into production.

In recent years, China's styrene production capacity has expanded rapidly. In 2023, a large amount of new domestic capacity will continue to release, and according to preliminary statistics, the new capacity under planning is expected to reach 4.125 million t/a (see Table 3 for details). Styrene production capacity has surged rapidly, but the growth of demand hasn't kept pace with that of production capacity. Enterprises will have a sharp shrinkage in the profit of production and sales, which may affect the progress of some new production capacity in the later period.

Market analysis and forecast

Against the complex development environment in 2022, China's styrene market witnessed a surge in domestic supply, a continued shrinkage in imports, active exports and stable growth in market consumption. In 2022, the domestic apparent consumption of styrene was about 14.1411 million tons, a year-on-year increase of 3.78%. The growth rate moderated but the product self-sufficiency rate elevated to 95.89%. The supply and demand of China's styrene market from 2018 to 2022 are shown in Table 4.

In 2022, the profitability of the styrene industry chain was lackluster, because the rising price would cause terminal companies to stop due to losses. The styrene price didn’t keep pace with the continuously rising energy price in 2022, leading to a deceleration in consumption growth. The comparison of China's monthly styrene consumption and price trends in 2022 is shown in Figure 1.

    Figure 1 The comparison of China's monthly styrene consumption and price trends         in 2022

The downstream of styrene is mainly concentrated in three major fields: expandable polystyrene (EPS), acrylonitrile butadiene styrene (ABS), and polystyrene (PS). In recent years, these three main downstreams have shown a modest rise in demand. In 2022, these three main downstream in total accounted for 68.92% of domestic styrene consumption, a year-on-year increase of 2.52%. Among them, PS was the largest downstream of styrene in 2022, with demand accounting for 24.93%, higher than 2021, mainly because the production capacity increased when the industry profits were acceptable during the year. Followed by EPS, it had a lower proportion than in 2022, mainly because the industry's production capacity increased during the year, while the profitability of production and sales was not good enough and the terminal demand was below the average, leading to the decrease of EPS output. The third was ABS, with an increased market share compared to 2021, driven by growth in both capacity and production. Looking ahead to 2023, it's anticipated that the production capacity of these three major downstream fields will continue to rise, subsequently increasing their consumption share to more than 70% of the total consumption. The downstream consumption structure of China’s styrene in 2022 is shown in Figure 2.

Figure 2 The downstream consumption structure of China’s styrene in 2022

It is expected that in the next few years, domestic PS, ABS and EPS will have peaks of new construction and expansion, and the industrial scale will further expand. According to preliminary statistics, the production capacity of EPS, PS, and ABS will increase to 8.64, 9.60, and 10.965 million t/a respectively by 2027, which will remain the main force supporting the demand for styrene. Other downstream fields are also anticipated to experience capacity increases. It is estimated that from 2023 to 2027, as downstream industries gradually ramp up their production and output, the consumption of styrene industry will be gradually increased.

Import and export analysis and forecast

Since 2019, with the continuous expansion of domestic styrene production capacity, China’s supply has increased year by year, while imports have continued to shrink. In 2022, the total import volume was 1.1432 million tons, a year-on-year decrease of 32.41%, and the import dependence dropped to 4.11%. As of 2022, China remains a net importer of styrene. Over the recent years, China's major sources of styrene imports have not changed much. In 2022, the top five sources of imports were Saudi Arabia, Taiwan of China, Kuwait, Japan and Singapore, collectively accounting for 98.99% of the total. Among them, Saudi Arabia held the majority share at 66.77%, maintaining its position as the leading source of imports and experiencing an increase of 21.56% compared to the previous year. China's major import sources of styrene in 2022 are detailed in Table 5.

In 2022, China's styrene import trade was predominantly conducted through general trade, accounting for about 90.52% of the total import volume, an increase of 7.53% from 2021. The specific trade modes are shown in Table 6.

In 2022, China’s styrene exports surged significantly, with a total export volume of approximately 562 500 tons, a year-on-year increase of 139.57%. Throughout the year, the highest export volume stood at 155 400 tons in May, accounting for 27.63% of the total exports in 2022. The major export destinations of China’s styrene in 2022 are shown in Table 7.

In 2022, China's styrene was mainly exported through general trade, reaching 532 400 tons, accounting for 94.65% of the total export. The specific trade modes are shown in Table 8.

Recommendations for future development

In the next few years, as the relevant planned styrene units and those being built successively come into operation, China's styrene production capacity will be further improved. However, the supply increases faster than the consumption, making industry competition much fiercer. In order to promote the sustainable and healthy development of the styrene industry, the suggestions are as follows:

(1) Adapt to low-carbon development, accelerate the R&D of environmentally friendly and low-cost technology

From the production cost of domestic styrene units, dry gas method and cogeneration method have lower cost than conventional ethylbenzene dehydrogenation method. Therefore, it is recommended to intensify the research on technologies such as dry gas method and cogeneration method, and efficiently utilize refinery dry gas, liquefied petroleum gas and other by-product gases to meet the requirements of low-carbon environmental protection.

(2) Use advanced technology to speed up the scale and technical transformation of small and medium-sized styrene units

In the future, with the continuous expansion of production capacity, the outdated equipment and production capacity will be gradually eliminated at a faster pace. It is suggested that domestic small and medium-sized styrene enterprises should adapt to local conditions, give full play to the advantages of regional resources, use the successfully developed advanced technology to carry out technological transformation of existing units as soon as possible, gradually enhance both the production scale and technical skills, and move towards large-scale and super-large direction to enhance market competitiveness.

(3) Improve the cost performance of products and expand the international market

While satisfying domestic demand, continuous efforts should be made to elevate the quality of China’s styrene products and reduce production costs, formulate strategic export strategies to speed up product exports, so as to resolve the pressure on production and sales brought about by overcapacity in the future.