Introduction: In the second quarter, as US-Iran negotiations progressed, international crude oil entered a phase of digesting fluctuations, with the market trending downward. The styrene market experienced regional supply-demand dynamics, weakening alongside the growing impact of subdued demand. Additionally, basis spreads between intercontinental styrene markets gradually narrowed, limiting the operational space for China's styrene exports. By early June, the theoretical intercontinental arbitrage window had closed.

In the second quarter, styrene prices declined across intercontinental markets. As of June 11, the European styrene market had fallen 27.87%, the US styrene market 20.90%, and the CFR China market 17.33%.

In Q2, after a significant surge driven by geopolitical tensions such as the Strait of Hormuz blockade in March, crude oil prices generally declined in April, May, and June, gradually absorbing the earlier energy and chemical market gains. Market sources also indicated weak feedstock trends, persistently poor downstream demand, and the restart of some styrene production units in the quarter. Overall, intercontinental styrene prices fell sharply in Q2, and price spreads between major markets narrowed. Theoretically, as of June 11, the arbitrage windows between Asia-Europe and Asia-US had closed, leaving only a slight opening between Europe and the US.

Table: International Styrene Market Prices (USD/ton)

| Date | June 11 | March 31 | Change | % Change |
|------------|---------|----------|--------|----------|
| CFR China | 1145 | 1385 | -240 | -17.33% |
| FOB ARA | 1220 | 1691.5 | -471.5 | -27.87% |
| FOB USG | 1144 | 1446.28 | -302.28| -20.90% |

In Q2, the price spread between Asian and European markets fluctuated between -415.5 and -75 USD/ton. Inter-regional spreads were favorable for arbitrage operations during mid-April, early May, and mid-to-late May, but at other times, higher freight rates made long-distance shipments less viable. As European supply increased, demand weakened, and feedstock prices fell—factors that weighed on the market—European prices declined more sharply than Asian prices. By mid-June, the Asia-Europe spread had narrowed rapidly to below 100 USD/ton, closing the intercontinental arbitrage window. China's styrene exports to Europe in Q2 first increased and then decreased.

In Q2, the theoretical price spread between China and the US ranged from -270 to 1 USD/ton. With crude oil holding at elevated levels, intercontinental freight rates rose in April. However, the freight cost between China and the US was lower than the price spread, theoretically opening the arbitrage window. In practice, no actual deals were concluded between China and the US in April, partly because the US is a major styrene exporter and due to factors such as tariffs and intercontinental trade competition. In May and June, falling feedstock prices and increasing US domestic supply caused US prices to drop more than Chinese prices. The resulting spread narrowed below freight costs, theoretically closing the arbitrage window. No spot transactions occurred between China and the US in Q2.

In Q2, China's styrene exports featured limited long-haul volumes, with shipments primarily focused on Asian short-sea routes. In April, price spreads between China and neighboring countries exceeded theoretical freight costs, and supply-demand adjustments driven by crude oil transport and price increases supported good export volumes for Chinese styrene. In May, freight rates rose, and after various regions adjusted their supply and demand dynamics, demand for imported styrene weakened. However, May is a peak month for global styrene plant maintenance, and Chinese styrene prices remained among the lowest globally, so exports remained relatively stable. However, discussions for June exports began to decline in May. According to market data, China exported 195,400 tons of styrene in April; May exports are expected to be around 190,000–200,000 tons (including some deferred April shipments); and June exports are expected to decline significantly. Overall, the styrene export sector is entering a period of contraction after a phase of strong shipments.

From an intercontinental perspective, China's styrene exports rose significantly in the first half of the year. However, after this brief "boom," as the market returns to normal rationality, styrene exports are expected to shrink. Reasons include: international trade policy competition; regional tariffs and the impact of anti-dumping policies on Chinese styrene; longer shipping distances leading to relatively higher export logistics costs; and the waning of geopolitical tensions, which will allow Middle Eastern styrene production to squeeze China's export market. Additionally, after the peak maintenance season ends, supply in Europe and the US is expected to increase somewhat, while downstream demand is forecast to remain persistently weak, reducing intercontinental demand for imported styrene. Overall, long-haul export operations are expected to be difficult in Q3, with Chinese styrene exports continuing to focus on short-sea Asian markets, and total export volumes expected to decline.