In 2023, all industries in China’s styryl-ABS-PS-EPS industry chain have entered a stage of oversupply cycle, from the point of view of new capacity, styrene and ABS are at the forefront of year-on-year growth, respectively 21% and 41%, but the growth rate of the demand side is slow, resulting in continuous shrinking profit margins of various industries in the industry chain. In particular, the profit of ABS and PS shrank significantly year-on-year, with a range of about 90%. Industrial chain industry capacity to continue to expand the trend, but the demand side is difficult to have a new growth point, all industries will face the adverse situation of supply and demand mismatch, macro and industry boom decline and other adverse factors, the industry operating pressure increased significantly.

In 2023, styrene production and consumption of styrene continued to grow by the three downstream centralized production

From 2019 to 2023, the compound growth rate of China’s styrene production was 16.05%, showing a steady rise year by year, and from 2020-2022, the production was in a state of high increment, with an average annual increase of about 1.63 million tons. In 2023, with a new round of production capacity explosion period, styrene production again expanded to more than 2 million tons during the year. Beginning in 2021, the state of domestic styrene overcapacity has gradually reflected, and with the introduction of new capacity, capacity utilization has been further suppressed. In 2023, due to the centralized production of downstream plants, there is a significant increase in demand, which stabilizes the start of new installations.

From 2019 to 2023, China’s styrene consumption showed an increasing trend year by year, with a compound annual growth rate of 7.89% in the past five years, and the styrene consumption reached 16.03 million tons by 2023, an increase of 13.66% compared with 2022. From 2019 to 2021, due to good downstream profits of styrene, styrene price fluctuations did not have a significant impact on styrene consumption. In 2022, the overall profit of the styrene industry chain will shift upward, and styrene and downstream products will gradually enter losses, resulting in limited incremental styrene consumption. In 2023, even if the downstream production profit is still not good, but under the competitive pressure of concentrated production, the downstream factory is in a state of insisting on production, at the same time, the terminal demand also has a better performance, basically digest the overall output increment of the downstream, and ultimately lead to the obvious increase in styrene demand during the year

二.In 2024, the downstream production of styrene is “further”, and the pressure of the industrial chain is moved down!

In 2024, styrene supply and demand are expected to continue to show growth. According to Longzhong data estimates, from the perspective of the new investment plan of styrene equipment in 2024, one set of styrene new equipment in the second half of the last year, that is, the 600,000 tons/year device of Shandong Jingbo Petrochemical that is initially expected to be put into operation in March to April, and the 450,000 tons/year POSM device of Shenghong Refining and Chemical that is planned to be put into operation in the second half of the year, a total of 1.05 million tons/year. Compared with 2023, the annual production capacity is expected to decrease by 71.62%, and the styrene increment is limited throughout the year. Downstream, the current expected investment, EPS is tentatively expected to have 1 million tons/year of new device capacity pre-investment plan, PS has 1.25 million tons/year of new device capacity pre-investment plan, ABS has 2 million tons/year of new device capacity pre-investment plan.

To sum up: In 2023, the downstream production of styrene appears, and the demand is significantly increased, which stabilizes the start of the new equipment of styrene. Although the main downstream production capacity of styrene increased during the year, but the lack of terminal demand to follow up led to a decline in product capacity utilization, but with the development of the market, it is expected that the new production capacity of styrene in 2024 is lower than the main downstream increase, and the situation of loose supply and demand of styrene in 2024 will be eased.