The fundamentals are improving! Are there new trading opportunities in the styrene market?

After the Spring Festival holiday, the styrene market shows a clear characteristic of “tight supply and uncertain demand.”

CITIC Futures researcher Yin Yijun stated that since early 2026, styrene exports have continued to strengthen, directly leading to a significant narrowing of inventory accumulation from January to February. Data from Longzhong Information shows that after the holiday, the inventory of styrene at East China ports was 158,100 tons, at a low level in recent years, fully in line with market expectations.

In interviews, Futures Daily reporters learned that thanks to the current considerable profit margins, domestic styrene operating rates have continued to rise during the Spring Festival holiday. However, analysts believe this upward trend is unsustainable.

Yin Yijun introduced that by February 2026, three styrene units had resumed operation as planned, increasing the operating rate by about 5 percentage points from the end of January. Currently, styrene profits are good, raising concerns that supply may further increase. However, a comprehensive review of domestic facilities shows that upcoming maintenance plans are dense, with delayed restart plans, and supply growth expectations are not strong.

More notably, a high proportion of domestic styrene units have been shut down for long periods. Yin Yijun said that since 2023, the number of long-term shutdown styrene units in China has continued to increase, now accounting for 11% of total domestic capacity; if including the 660,000-ton unit at Zhenhai LianDe that has been shut since mid-September 2025 without restart news, the proportion of long-term shutdown units rises to about 14%.

Yin Yijun believes that overall, even considering the supply increase from potential restart of units, factors such as the large number of long-term shutdown units, dense upcoming maintenance, and delayed restart plans suggest that styrene supply will remain tight from March to April, and the market will return to inventory reduction. However, over time, the probability of supply growth will gradually increase.

On the demand side, downstream industries for styrene are showing a “differentiated recovery.”

Yin Yijun explained that the polystyrene (PS) sector’s inventory buildup during the Spring Festival was less than last year, showing some resilience. However, due to slightly weaker profit margins, operating rates decreased by about 6 percentage points month-on-month. The resumption of production for expandable polystyrene (EPS) after the holiday met expectations, with current operating rates back to 12%. The operating rate for acrylonitrile-butadiene-styrene (ABS) remains stable, and many producers are overselling, so subsequent operating rates are expected to stay strong.

In this regard, Jin Tianfeng Futures analyst Tang Jianlin added that compared to the same period last year, the overall downstream restart pace this year is slower. The main reason is that terminal demand has not fully returned, coupled with low profit margins for downstream companies, which suppresses production enthusiasm.

“Currently, downstream industries for styrene have not fully resumed work. Overall, the restart pace for ABS is slightly better than expected, while EPS and PS are slower than market expectations. It is expected that the industry operating rate will see a significant improvement in March,” said Feng Xiaofen, analyst at Founder Mid-term Futures.

Looking ahead, Feng Xiaofen stated that since late December 2025, the price center of styrene has continued to rise, with significant recovery in plant profits. With fewer new units coming online in 2026, the supply-demand pattern is expected to continue improving, further boosting market optimism. Domestically, future maintenance and restart activities will coexist, with overall maintenance scale expected to expand further. Historically, in March, the chemical industry enters a maintenance period, and in the second quarter, maintenance peaks, leading to a supply decline. Overseas, according to ZhuoChuang Information, several units in the US and Kuwait have recently restarted or plan to restart, but in regions like Saudi Arabia, the US (another two units), Germany, the Netherlands, and Japan, styrene units have scheduled maintenance in March or April, with maintenance scale exceeding restart scale.

“Entering March, both domestic and international maintenance seasons will begin. As styrene units undergo maintenance, supply will contract, while downstream demand gradually recovers, creating expectations for improvement in fundamentals. Attention should be paid to whether long-term shutdown units due to cost issues are willing to restart,” Feng Xiaofen said.

Yin Yijun believes that recent market fluctuations are mainly driven by geopolitical factors. As new maintenance projects are implemented and downstream production resumes, styrene will continue to de-stock, and market focus will gradually shift to demand and de-stocking efforts. The pure benzene spring inspection will soon begin in the second quarter, and there is a possibility of de-stocking for benzene, which could bring new trading opportunities to the styrene market.

“Three key variables will influence the styrene market in March: exports, demand, and geopolitical situation,” said Tang Jianlin. Regarding exports, ongoing overseas plant maintenance has kept the price difference between domestic and international markets high. If this pattern persists, styrene exports in March are expected to increase significantly, supporting prices. As for demand, March is traditionally a peak season, and market sentiment is generally optimistic. However, current downstream profit margins are weak, and the strength of demand recovery remains to be seen. Regarding geopolitical factors, the US and Israel’s attacks on Iran are expected to push international oil prices higher, which will be bullish for styrene prices.

(Source: Futures Daily)