Since this year, domestic styrene market weakness is difficult to hide. Most commodities plunged in the first quarter, as did styrene, hit by a historic slump in international crude oil and a global outbreak of the disease. Since April, the market has been hovering at a low level, no obvious signs of a rebound. So far, east China styrene quoted price 5300 yuan/ton, than the end of last year fell by 27% or so.

In my opinion, in addition to the impact of crude oil and epidemic factors, supply and demand imbalance is one of the straw that breaks the market.

From the perspective of production capacity, according to online statistics of Chemical Industry, by the end of 2019, domestic styrene capacity is about 9.65 million tons/year. Since the beginning of this year, The annual production capacity of Zhejiang Petrochemical Co., LTD, Hengli Petrochemical Co., Ltd. and Liaoning Baolai Petrochemical Co., LTD has been increased to 1.2 million tons, 720,000 tons/year and 350,000 tons/year. As both Zhejiang petrochemical and Hengli petrochemical units were put into operation at the beginning of the year, the output release was relatively obvious. In addition, the year will also have zhonghua Quanzhou 450,000 tons/year, Gulei petrochemical 600,000 tons/year and other units planned to put into production, styrene industry ushered in the peak capacity expansion.

In terms of import and export, in the past few years, due to insufficient domestic styrene production capacity, external dependence reached 40%~50%, the import of goods has a great impact on the trend of the domestic styrene market. With the increase of domestic production capacity and the final decision on styrene imported from South Korea, Taiwan and the United States issued by the Ministry of Commerce in 2018, the supply of imported styrene from the above regions has decreased, and the overall import dependence has also dropped to about 30%. According to customs statistics, the import of styrene from January to July this year was 1.8638 million tons, up 14.7% year on year. During the statistical period, the styrene market in Europe and The United States experienced a lower decline than the Chinese market due to the low demand caused by the epidemic, which led to the opening of the arbitrage window and the increase in the import volume of styrene in China, which brought some pressure to the domestic market.

From the downstream, styrene is mainly used to produce EPS, ABS and PS. So far, the only units put into production this year are shandong Yuhuang 60,000 tons/year EPS unit and Saibaolong 100,000 tons/year PS unit. The planned production in the later part of this year is mainly focused on EPS devices, including 300,000 tons/year of Zhuhai and 200,000 tons/year of Yanchuan, with the overall production capacity less than 1 million tons/year. And PS also plans to launch the production capacity of 100,000 tons/year or so, ABS has not put into production plan this year. Compared with styrene's large expansion, its main downstream demand growth follow-up is obviously insufficient.

In a word, this year is a big year for styrene industry to put into production. With the spread of heat of integrated refinery and chemical projects, there will be a large number of planned installations in the future, and domestic styrene capacity is expected to increase substantially, which will inevitably squeeze the import space. At the same time, although styrene downstream has expanded, but the overall quantity is small, styrene industry will come under pressure.