In October, on the cost side, crude oil fluctuated strongly, and the supply and demand of pure benzene were in tight balance. Under the support of cost, it is expected that the price shock is strong, and the cost has strong support for styrene. On the supply side, unit restart is roughly equivalent to maintenance. Under the power restriction policy and continuous production losses, it is not excluded that some unit restart delays and maintenance of new units, and the output is expected to be equivalent to or decrease from September. On the demand side, some downstream units are restarted and increased, and the operating rate is expected to rise compared with that in mid and late September. Moreover, there is a new unit production plan in the downstream, and the demand is expected to rise. On the inventory side, the number of vessels arriving at the port in October is expected to be lower than that in September, and the downstream demand is expected to pick up. It is expected that the port inventory will fall down, and the styrene supply in some areas has been tight due to production restrictions. Overall, there is no significant increase in output, and downstream demand is expected to rebound. Driven by the rising cost, styrene is expected to have a strong shock in October. It is suggested to treat it with more ideas. The current price has reached the 10,000 yuan / ton level, and we pay attention to whether it can make an effective breakthrough. Risk tip: the cost weakens and the improvement of downstream demand is less than expected.

1. Pure benzene strengthened following the cost shock

Pure benzene: on the cost side, the cost continues to rise, pushing up the price of pure benzene. The OPEC + October meeting maintained the previous incremental production increase plan, and there was no significant change in crude oil supply; However, the epidemic situation has gradually eased, economic activities have resumed, and the demand for crude oil has rebounded. At present, the global energy supply shortage such as coal and natural gas has driven the increase of crude oil demand, which has led to the continuous rise of crude oil price. Under the background of tight energy supply, it is expected that the crude oil price will continue to fluctuate strongly. The coal supply is tight, and the cold weather increases the demand for power generation and heating. It is expected that the coal price will maintain a strong shock trend. On the supply side, most of the oil benzene maintenance in September will be restarted in October. Due to the high cost of hydrogenated benzene, the processing is at a loss, and the operating rate will remain low in October. On the whole, the output of domestic pure benzene increased, but the increase was limited. On the demand side, the two downstream caprolactam units are put into operation, which brings an increase in demand for pure benzene. The power and production restriction policy has been relaxed compared with that in mid and late September, but the power restriction will continue, and the downstream operating rate will rise compared with that in late September, but it is expected to maintain a narrow range. Overall, the demand is weak, and specific attention should be paid to the change of power restriction policy. On the inventory side, the port inventory of pure benzene continues to fluctuate at about 50,000 tons. According to the shipping schedule in October, the arrival is less than that in September, and the port inventory is expected to remain low.

On the whole, there is no prominent contradiction between supply and demand of pure benzene, and the price follows the cost logic. Under the background of strong cost, the price shock of pure benzene is expected to be strong.

From the production profit of styrene, the production of styrene non integrated unit continues to be in a state of loss, which makes the price of styrene easy to rise but difficult to fall. Especially in the stage of rising cost, the price will rise with it.

2. The overhaul output of large styrene plant is expected to be similar to that in September

From the perspective of plant dynamics, 1.25 million tons of production capacity involved restart in October, of which Maoming Petrochemical and Jiangsu Xinyang have been restarted, and the restart time of 330,000 tons of production capacity is uncertain. In terms of unit maintenance, it is expected to add 1.46 million tons of capacity maintenance, of which the two production lines of Zhejiang Petrochemical have a total capacity of 1.2 million tons. It is planned to be repaired for 20 days respectively, of which 600,000 tons of capacity has been shut down for maintenance on October 10. According to the maintenance plan, the actual maintenance capacity in October is 600000 tons. From the perspective of new units, the production plans of new units are mostly delayed. Luoyang Petrochemical's 120,000 ton capacity is expected to be put into operation at the end of October, which has little impact on the output in October. The capacity increase is mainly reflected in November.

To sum up, the capacity involved in unit restart and overhaul in October is roughly the same, and the impact of new capacity on the output in October can be ignored. Moreover, under the power restriction policy and continuous loss, it does not rule out the delay of unit restart or the addition of unplanned shutdown and overhaul. Therefore, it is expected that the output of styrene in October is equivalent to or reduced from that in September.

3. The start-up picks up and new units are put into operation, and the downstream demand is expected to increase

From the downstream operating rate, as of October 8, PS operating rate was 78.75% (+ 5.86%), EPS operating rate was 44.53% (- 7.32%), ABS operating rate was 91.78% (+ 4.25%), and UPR operating rate was 38% (- 1.0%). In late September, under the influence of the power restriction policy, the collective construction in the downstream weakened. During the national day, the downstream operating rate trend was differentiated, the operating rates of PS and ABS rebounded, while the operating rates of EPS and UPR continued to weaken.

Specifically:

EPS: from the perspective of device dynamics, Dongguan Xinchangqiao, Jiangsu Jiasheng, Changzhou Chengda, Xinjiang Xingda and other devices were still shut down before the festival, and Shenyang Zhengxing was shut down for four days during the national day, involving a total production capacity of 1.2 million tons, of which 720000 tons were restarted in early October, of which Jiangsu Jiasheng 4.36 million tons were restarted on October 10. In terms of new units, there is no new unit production plan in October. With the successive restart of maintenance devices, it is expected that the EPS operating rate will rise, and the output will increase compared with the middle and late September. However, under the dual control of energy consumption, the operating rate is difficult to rise significantly.

PS: from the perspective of device dynamics, the current power restriction policy is somewhat relaxed compared with that in the middle and late September. In the early stage, some load reduction devices have been restarted or lifted due to power restriction. For example, Cybertron stopped one production line on September 27 and restarted in early October; Zhenjiang Qimei reduced its negative by 50% on September 17 and raised its negative on October 1. However, there are still new parking or load reduction plans in October. Dushanzi Petrochemical stopped a production line from October 8 to 14, and yashtel stopped on October 8. A company in East China reduced its load by 15% in October. In terms of new devices, Shandong Yuhuang 100,000 tons began to feed on October 11, and the products are expected to be released on October 13; Shandong Lanhua 100,000 tons is expected to be put into operation from October to November; Shandong Doyle 200,000 tons has been put into trial operation on September 28 and is now in normal operation; In addition, Huizhou Renxin 180,000 tons and Liwan 400,000 tons of new materials are expected to be put into operation at the end of October, involving a total capacity of 980,000 tons, of which 580,000 tons put into operation at the end of October is expected to make a small contribution to the output in October. If the new unit is put into operation as scheduled, the losses caused by the reduction of the load of the hedging part will be offset. Generally, the output in October is higher than that in September. Specifically, we need to pay attention to the change of power restriction policy.

ABS: from the dynamic point of view of the unit, due to the power restriction of double control of energy consumption, Zhenjiang Qimei began to reduce the load to about 60% on September 20, and the load increased to 90% on October 1; Tianjin Dagu has maintained 80% load due to steam, and there is no plan to increase the load temporarily; At present, 70% of the load of lejin Huizhou is expected to continue. Limited film sound, South China small enterprises open two stop five, some areas open one stop six. The opening of power rationing mode in Zhejiang may affect the operating load of ABS enterprises in Zhejiang. In October, ABS had no plan to put new devices into operation. Therefore, under the power restriction policy, ABS is expected to maintain an operating rate of about 90%.

UPR: in October, there are plans for the production capacity of 150,000 tons of Xinyang Technology (Zhangzhou), 250,000 tons of Guangdong Chenbao and 150,000 tons of Guangxi Huapan resin, with a total capacity of 550,000 tons, which will increase the demand for styrene.

To sum up, some downstream units have been restarted and increased successively, and the operating rate will rise compared with that in mid and late September. At the same time, there is a production capacity of 1.43 million tons of PS and UPR in the downstream. The downstream demand for styrene is expected to rise in October, but we still need to pay attention to the change of power restriction policy.

4. Styrene inventory may increase first and then decrease

From the perspective of port inventory, during the national day, the unloading of imported ships accelerated and the arrival increased, while the less delivery made the port inventory pick up. As of October 6, the inventory of East China port was 127,800 tons, an increase of 36,700 tons on a weekly basis. However, according to the shipping schedule forecast, the number of ships arriving at the port in October is less than that in September, and there are large-scale plant maintenance in October. The output is expected to be equivalent to or reduce that in September, while the downstream demand is expected to pick up. Therefore, the port inventory is expected to fluctuate and fall. The factory inventory is expected to remain at about 150,000 tons, which is at a relatively low level in the same period in history.

5. Summary and suggestions

In October, on the cost side, crude oil fluctuated strongly, and the supply and demand of pure benzene were in tight balance. Under the support of cost, it is expected that the shock is strong, and the cost has strong support for styrene. On the supply side, unit restart is roughly equivalent to maintenance. Under the power restriction policy and continuous production losses, it is not excluded that some unit restart delays and maintenance of new units, and the output is expected to be equivalent to or decrease from September. On the demand side, some downstream units are restarted and increased, and the operating rate is expected to rise compared with that in mid and late September. Moreover, there is a new unit production plan in the downstream, and the demand is expected to rise. On the inventory side, the number of ships arriving at the port in October is expected to be lower than that in September, and the downstream demand is expected to pick up. It is expected that the port inventory will fall down, and the styrene supply in some areas has been tight due to production restrictions. Overall, there is no significant increase in output, and downstream demand is expected to rebound. Driven by the rising cost, styrene is expected to have a strong shock in October. It is suggested to treat it with more ideas. The current price has reached the 10,000 yuan / ton level, and we pay attention to whether it can make an effective breakthrough. Risk tip: the cost weakens and the improvement of downstream demand is less than expected.