[Introduction]: In May, China's styrene market saw a slowdown in trading activity, with the direct impact of geopolitical conflicts in the Middle East on styrene weakening. Market attention gradually shifted to the demand side. Prices of styrene and its major upstream and downstream products declined, while profit margins along the industrial chain moved upstream. Despite frequent planned and unplanned maintenance shutdowns that significantly reduced domestic supply, downstream purchasing sentiment remained cautious, keeping market prices in a low range and resulting in a month-on-month decline in average prices.

1. Costs and styrene decline in tandem, non-integrated profit margins slightly recover

According to data from chempricehub, the average profit margin for non-integrated styrene units in May was -358 RMB/ton. Although still in a loss position, this represented an increase of 197 RMB/ton, or 35.52%, month-on-month. On the feedstock side, East China pure benzene averaged 8,286 RMB/ton during the period, down 4.22% month-on-month; Northeast Asia ethylene averaged 1,145 USD/ton, down 17.74% month-on-month. During the month, the styrene market exhibited a weak, volatile trend, with feedstock pure benzene and ethylene prices declining in tandem. Due to frequent unplanned maintenance of styrene units and a significant reduction in supply-side output, the fundamentals of styrene were temporarily stronger than those of feedstocks, leading to a modest recovery in non-integrated unit profits. From the perspective of profit distribution along the industrial chain, profits showed a trend of concentration toward the upstream.

2. Frequent unit maintenance leads to significant drop in styrene operating rate

In May, domestic styrene production continued to decline, and capacity utilization also fell notably. Data show that the domestic styrene capacity utilization rate in May was 67.63%, down 2.70 percentage points from the previous month. In terms of unit operations, excluding long-term shutdown units, a total of 13 styrene units were under maintenance during the month, involving a combined capacity of 5.68 million tons. As a result, the monthly maintenance loss reached 484,700 tons, a significant increase of 36.56% month-on-month, indicating a pronounced contraction in supply.

Entering June, some units that were previously under maintenance will gradually resume operations, such as those at Zibo JUNCHEN and Zhejiang Petrochemical's ethylbenzene dehydrogenation units. However, as the maintenance cycles of some units span the entire month of June, the loss from earlier maintenance will persist to some extent. Overall, domestic styrene production is expected to continue to decline slightly in June, to around 1.474 million tons, and capacity utilization may further adjust to approximately 66.36%, with the supply side remaining relatively tight.

3. Mixed purchasing sentiment on demand side slows styrene market shipment

Data from chempricehub show that in May, domestic downstream enterprises' purchasing sentiment for styrene was generally cautious, with domestic downstream consumption of styrene reaching 1.4365 million tons, up 1.63% month-on-month, but no significant volume expansion was seen in consumption. Looking at the performance of major downstream products, profit divergence was prominent. PS profits recovered significantly, with the average monthly profit turning from negative to positive, and operating rates are expected to improve in June. ABS profits continued to decline, with producer profits shrinking and losses widening. EPS profitability declined, with purchases mainly for rigid demand. Overall, as styrene prices continued to fall, the production and sales profits of some downstream products improved to some extent, which will support a slight increase in output in June. However, it should be noted that while overall rigid demand is still acceptable, spot market trading performance has been poor, and actual end-user consumption is relatively stable, but intermediate inventory replenishment and demand are clearly insufficient. Looking ahead to June, the outlook for new orders is not optimistic, with export volumes expected to decrease, providing limited overall demand support. Monthly domestic downstream consumption of styrene is expected to be around 1.44 million tons, a slight increase but with limited growth.

4. Supply-demand stalemate, styrene prices fluctuate at low levels

The main downstream market—styrene—continued its weak downward trend in May. At the end of May, the three major mainstream market prices were significantly lower than mid-May levels, with the most notable decline seen in the price of delivered cargo to North China, which fell 4.77%. Overall, the decline in major styrene markets in May ranged from 2.34% to 4.77%, with the price center continuing to move lower. Styrene's weak performance clearly dragged down market sentiment for ethylbenzene, further pressuring ethylbenzene prices.

According to chempricehub price statistics, domestic styrene market prices exhibited a volatile pattern overall in May. The average ex-tank price of styrene in Jiangsu was 9,594 RMB/ton, down 6.49% month-on-month, with the price center significantly lower than the previous month. Meanwhile, the range of price fluctuations during the month narrowed compared to earlier periods, reflecting cautious sentiment among both bulls and bears and a lack of clear unilateral direction in the market. Looking at the specific trajectory of price movements in May, the market can be roughly divided into three stages: early in the month, supported by feedstock costs and pre-holiday replenishment demand, the market experienced a brief rally; in mid-May, as crude oil and feedstock pure benzene prices weakened, port destocking fell short of expectations, and spot demand remained weak, prices came under pressure and declined; at the end of the month, market expectations of a US-Iran peace deal grew, with hopes for the reopening of the Strait of Hormuz gradually rising, leading to cautious sentiment among participants and an acceleration of price declines, ending the month on a weak note.

Looking ahead three months, the styrene market's supply-demand structure is expected to gradually shift from the current destocking state to a slight buildup. On the cost side, East China pure benzene prices in June are expected to decline first and then rebound, while ethylene prices are expected to remain weak, weakening cost support for styrene. On the demand side, reduced export negotiations also weigh on the market. Overall, the market lacks effective unilateral driving forces in the short term, and prices are expected to remain volatile at low levels. Specifically, spot styrene prices in Jiangsu are expected to trade in a range of 8,900–9,400 RMB/ton in June, and the average monthly price over the next three months is expected to mainly trade in the range of 8,800–9,500 RMB/ton. Going forward, attention should be focused on the restart pace of units, progress of downstream new orders, and the impact of geopolitical developments on crude oil prices.