Sep 19, 2023
EPS production is stable, with limited new capacity. Recently, Daluwang started production successfully, enhancing Hengli's styrene consumption in Northeast China. ABS production is increasing rapidly, despite industry losses. End-use orders have improved, aiding with the successful startups of FCFC's units and the rate hike of some units, accelerating styrene demand digestion. ABS primarily relies on in-park supply, and strong exports of new energy vehicles and household appliances sustain ABS demand. PS is showing weaker performance. After SECCO's unit restart in July, overall operational rates are supported, but industry losses are around 500 yuan/mt, leading to some financial risk hedging. However, the PS market liquidity is limited, with little hedging volume, constraining incremental styrene consumption.
Amid the sustained rise in domestic supply, it doesn't immediately appear unmanageable. The pressure from reduced import dependence has led to a gradual decline in net imports, though not necessarily reflected in export volume. Additionally, downstream products with low profit margins are prompting demand for recycled materials, and the drive to enhance Chinese manufacturing for export also suggests downstream potential to accommodate styrene demand.