By Cui Jing Jinlianchuang Chemical
In recent years, the growth rate of global styrene production capacity outside China has continued to slow down. As of the end of 2021, the total global styrene production capacity was close to 39.8 million t/a, of which China's total production capacity exceeds 15 million t/a, accounting for 38% of the global total. As China's styrene continues to be in a high-speed expansion cycle, China's global share will continue to increase in the future.
China's styrene is in a high-speed expansion cycle
In recent years, China's styrene production capacity has been increasing year by year.Since 2020, China's styrene has entered a high-speed expansion cycle. In 2021, China's styrene addition and expansion will total more than 3 million tons per year, an increase of 27% over the previous year, breaking the 15 million tons per year mark. Moreover, with the official production of the new PO/SM plant of Zhenli Chemical Phase II in early January 2022, the annual production capacity of styrene in China has increased to around 15.8 million tons per year.
The current styrene production capacity distribution in China is shown in Figure 1.
Figure 1 Statistics of China's styrene production capacity by region
Among them, the East China Yangtze River Delta is the largest producing area with the most concentrated styrene production capacity in China, mainly represented by Zhenli Chemical with 1.255 million t/a, Zhejiang Petrochemical with 1.2 million t/a, Shanghai Secco with 688 000 t/a and Xinyang Chemical Co., Ltd. Group 650 000 t/a and other enterprises; North China is currently the second largest production area, mainly represented by Wanhua Chemical 650 000 t/a, Tianjin Dagu 500 000 t/a, Qingdao Gulf Chemical 500 000 t/a, Yuhuang Chemical Two sets of 500 000 t/a plants, etc.; South China ranks third, as Mediterranean Oil Shell owns two sets of 1.4 million t/a styrene plants, which are the enterprises with the largest production capacity in China. The two sets of new production units in 2021, 10 000 tons per year and 450 000 tons per year in Sinochem Quanzhou, are also representatives of major local companies.
China's styrene production and apparent consumption continue to grow, and the downstream consumption field has not changed much
With the continuous release of new domestic styrene production capacity, styrene production has continued to increase in recent years. From the trend comparison in the past five years, the average annual growth rate from 2017 to 2018 is basically stable at around 11%, and from 2019 to 2020 the average annual growth rate is more than 15%, and the average annual growth rate in 2021 is as high as 23%, as shown in Figure 2. In 2021, the total domestic production of styrene reached a new high, reaching 11.955 million tons, an increase of 2.233 million tons compared with the same period in 2020, with an average monthly output of about 1 million tons.
Figure 2 Comparison of China's styrene production and average annual growth rate from 2017 to 2021
Judging from the apparent consumption of styrene in China from 2017 to 2021, it basically shows a trend of steady increase, with an average annual growth rate of around 7.5%. The increase mainly comes from EPS, PS, ABS, SBR, increased demand for SBC, UPR, etc. After the apparent consumption in 2018 exceeded 10 million tons, from 2019 to 2021, the domestic production of styrene continued to hit a new high, the main downstream performance was outstanding, and the apparent consumption of styrene continued to break through and increase. As of 2021, China's overall apparent consumption of styrene will reach 13.445 million tons, an increase of 870 000 tons or 7% year-on-year.
Figure 3 Comparison of apparent consumption of styrene in China and average annual growth rate from 2017 to 2021
From the perspective of the downstream consumption field of styrene in 2021, the overall change is not large, as shown in Figure 4:
Figure 4 The proportion of downstream consumption structure of styrene in 2021
Prospect of styrene market demand and supply
Forecast of styrene domestic supply trend in 2022: From the perspective of representatives of new styrene production units planned, Wanhua Chemical, Shandong Lihuayi Phase II, and Zhenhai Refinery Lyander Phase II will focus on mass production in the first quarter. Release, in the second and third quarters, Bohua Development, Lianyungang Petrochemical, Zibo Junchen, Guangdong Refining and Chemical Integration, Anqing Petrochemical Phase II are the representatives of the production plan, and at the end of the year, Zhejiang Petrochemical Phase II will be put into production. However, it does not rule out the possibility of delayed commissioning of some devices. Table 1 is a summary of the new construction of styrene production enterprises in China in 2022. It is tentatively estimated that by the end of 2022, China's total styrene production capacity is expected to approach the 20 million t/a integer mark. Judging from various factors such as the timing of production and the trend of construction, the growth rate of domestic production is obviously lower than that of production capacity. It is tentatively expected that the total output of styrene in China will increase to about 14 million tons in 2022.
Prediction of styrene import supply trend in 2022: Due to the continuous rapid expansion of domestic supply, the downstream enterprises will continue to be in an more advantageous position, especially in 2021, due to the tightening of foreign supply, the significant increase in international freight rates in some regions, and the serious long-term detention in China which led to a sharp drop in imports. After experiencing a sharp shrinking trend in 2021, the room for further shrinkage in 2022 is relatively limited. It is initially estimated that China's styrene imports will drop to about 1.5 million tons in 2022.
2022 styrene apparent consumption trend forecast: Combined with several major downstream capacity expansion plans, the overall growth rate is relatively lower than that of styrene. New releases are relatively limited. Preliminary estimates are that in 2022, the apparent consumption is expected to reach about 15 million tons, supported by the expansion of styrene and downstream industrial chains.
From the perspective of the long-term industry operation of styrene and downstream industries from 2022 to 2024, 2022 will be the year with the fastest expansion of styrene capacity, and it will also be the starting year when supply exceeds demand. There is a decrease, but if the superimposed part of the project is delayed in production in 2022, the overall pace of rapid capacity expansion will still be maintained. Until 2024, the growth rate of styrene capacity expansion will slow down significantly. From the perspective of the main downstream capacity expansion trend, there is a certain time mismatch between the new production time node and styrene supply. From 2022 to 2024, EPS will mainly be expanded and integrated by leading companies, while PS and ABS industries will be relatively concentrated in capacity expansion. In the next three years the proportion of EPS' demand for styrene shows a downward trend, while the proportion of PS and ABS's demand for styrene will increase and catch up with EPS. After styrene has experienced the most difficult turning point in 2022, the overall supply and demand pattern from 2023 to 2024 will be improved to some extent.
At the same time, affected by the concentrated release of production capacity in the past two years, the production profits and processing fees of styrene enterprises will continue to be compressed. The decrease of the styrene industry production in 2020-2021 has begun to show signs of decline, and the continued decline in the industry's operating rate in 2022-2024 will still become ageneral trend and even the periodic low load will become a normal phenomenon. Correspondingly, the domestic styrene industry has entered a painful period of prolonged loss time. In order to alleviate the pressure brought by the concentrated capacity expansion in China, Chinese styrene enterprises and traders will continue to pay attention to export arbitrage opportunities and actively explore export channels, and the increase in export volume will also be the general trend.
In addition, from the perspective of the technology and scale of new installations in the future, the proportion of PO/SM co-production and integrated large-scale installations will increase significantly. Compared with the traditional ethylbenzene dehydrogenation process, there are obvious advantages in cost and stronger anti-risk ability. For non-integrated and some old devices with high energy consumption, small-scale production enterprises without direct supply of raw materials, the pressure of survival will increase, and the industry has certain expectations for reshuffle.
