Styrene inventory:
The styrene inventory of the factory is very low, mainly due to the sales strategy of the factory and more maintenance.
Preparation of EPS raw materials downstream of styrene:
At present, the raw materials shall not be stocked for more than 5 days. Downstream stock keeping attitude is cautious, especially for high priced raw materials. Mainly due to the shortage of funds and pessimistic demand for the following winter off-season.
Styrene downstream EPS order:
(1) On a month on month basis: Orders from August to September improved significantly on a month on month basis in the first half of 2022. The existing orders are in hand for about a week, and the status of continuous orders is expected to be maintained until the middle of October.
(2) Year on year: orders decreased by about 15% – 20% year-on-year in 2021, and the demand at the end of real estate completion decreased significantly year-on-year, mainly supported by civil foam packaging consumption.
(3) The market focuses on real estate completion data, household appliance exports and consumption, but the largest marginal variable comes from civil consumption demand.
Commencement of EPS downstream of styrene:
80% of the load has already belonged to the relatively high starting level of the current downstream, and the load of some plants began to decline slightly month on month. In October, affected by the major national conference, North China is expected to have a policy of production restriction.
Inventory of EPS finished products downstream of styrene:
The inventory pressure is not large, which is at a historical neutral level. The stock removal speed in the peak season this year is much slower than that in previous years. However, due to the cautious operation strategy of the factory, the pressure on finished goods inventory is not large.
Our view:
Historically, there is no September when the price of styrene fell, and it is difficult to see October when the price of styrene continued to rise after the National Day holiday. The best time for rebound in September has ended, and the follow-up is just the tail. The current styrene is pure benzene in May. Cash is tight, and profits remain high; The port inventory continued to decline to the lowest level in history, and the construction started to repair slightly but still not high. After the Dragon Boat Festival in June, the macro negative release and the resonance of East China port stock accumulation overwhelmed the strong pure benzene. At present, the styrene with high profits, low inventory and neutral operation is in a volatile pattern, which is very sensitive to the accumulation of port stocks. The accumulation of pure benzene in early June is basically synchronized with the price decline. Jinjiuyinshi is a traditional peak season, and the current demand is just a month on month improvement. To repair the pessimistic expectations of the market in the second quarter is not to reverse the weak pattern in the fourth quarter. Based on the current valuation of styrene, it is already in the upper range of valuation, so it is not recommended to pursue more.