In the first half of 2021, Asia will face a large number of downtime for maintenance
The demand for packaging and household appliances is still the key
Global styrene oversupply is likely to escalate in 2021, as capacity increases in Asia and uncertainty about demand recovery is evident as the epidemic continues.
Although the Asian styrene price soared in October due to tight supply, in early December, the market supply increased due to the restart of some regional manufacturers, and the price lost its growth momentum.
The improvement of profit margin and the re opening of arbitrage business at the end of 2020 have brought more supply to the Asian market. Inventory may increase again before the Chinese New Year in February after falling to a relatively healthy level in the fourth quarter.
Asian styrene capacity growth
It is estimated that China's styrene production capacity will increase by about 6.88 million tons / year in 2021, which will aggravate the situation of oversupply and lagging demand growth in Asia, and eventually lead to production reduction. According to industry insiders, the new production capacity to be put into operation includes 1.2 million tons / year of Zhejiang Petrochemical, 650000 tons / year of CNOOC and 650000 tons / year of Wanhua petrochemical.
"In the face of excessive competition, suppliers with good cost structure will have an advantage," said one market person
At the same time, as a large number of factories will be shut down for maintenance in the firsthalf of 2021, the production loss is expected to partially offset the supply length and may support CFR China prices. This will also narrow the gap between CFR and domestic styrene prices in China and inhibit the import interest of Chinese buyers.