Styrene: The Spring Festival returns to the market

Looking back during the Spring Festival holiday, the peripheral financial market was strong, and the US economy recovered slowly. As for the expected number of interest rate hikes in 2019, the bulk commodity market was supported. In particular, during the Spring Festival, iron ore products rebounded sharply. According to statistics, the external market rose by 7.8%. On February 8, Singapore iron ore futures prices rose above 90 US dollars/ton, the highest level since 2014. Other domestic bulk commodity futures markets, especially the black sector, have risen and conducted. However, the styrene and related markets have not experienced the traditional “open door” effect, and the market has opened lower.

On Monday, the first trading day after the Spring Festival, styrene and related markets ushered in a slightly calm day. Although most of the commodities futures were strong, the styrene and related products futures market had a certain increase due to the festival. The situation is relatively calm, the overall maintenance of the market, the market has not yet fully returned to the market, the market fell on the day of the possible expectations, coupled with the continuous increase in prices before the long holiday, resulting in greater pressure on the top, the following several trading days it also continued the trend of the callback.

On the one hand, the international oil price fell by nearly 4.6% during the Spring Festival dragged down the market’s short-term trading sentiment, as disappointing US manufacturing data triggered investors to renew concerns about the global economic slowdown, followed by a limited decline in oil prices due to the Organization of Petroleum Exporting Countries (OPEC) The lead reduction efforts and the US sanctions against Venezuela are directed at tighter supply. Pure benzene, basically stable during the Spring Festival, around 588-600 US dollars / ton FOB Korea finishing, ethylene closed at 1085 US dollars / ton Northeast Asia, the price difference between styrene and ethylene reduced to 3 US dollars / ton, The support to the cost was stable. Although after entering this week, Northeast Asia ethylene began to rebound continuously to US$1,160/ton CFR Northeast Asia on Wednesday. The price difference between styrene and ethylene was widened. The cost support was strengthened from the beginning of the week, it may restrict the price decline of ethylene.

On the other hand, the high inventory accumulated during the Spring Festival holiday still needs to be digested. The current high inventory has put pressure on the market and has a bearish impact on the styrene market. According to port data, during the long holiday period, the inventory of Jiangsu, East China rose to 310,000 tons, and the chain data continued to rise, increasing by nearly 40,000 tons compared with the pre-holiday. Due to the shortage of long-term transportation and shipment, the high inventory level is an inevitable phenomenon. From the situation of the first trading day, the downstream industries are making slow progress, and the demand for PS is not expected. The operating rate of other industries is also in the upgrading stage. The apparent recovery window is expected to be in the downstream factory after the 15th of the first month. Or there is an increase in activities to enter the market to replenish stocks.

Limited to sufficient inventory, the market demand is expected to recover for some time, end-user purchase sentiment is more wait-and-see, styrene’s callback is in the normal range, followed by the Northeast Asian plant repair season, or slow down the suppression of high inventory. The Sino-US trade has made new progress. The new round of high-level economic and trade consultations between China and the United States in Beijing is the focus of the market. If the macro bearishness is slowly released, the styrene after the callback will still have a chance to rise.