The domestic PS market was strong in October, with significant increases in spot prices for various grades. As of October 31st, the benchmark price of PS was 12566.67 yuan/ton, with a price level increase of 12.87% compared to the beginning of the month.
Fundamental analysis
Cost factor: Due to the renewed tension in the Middle East, it has stimulated market concerns about international crude oil supply. There were reports of ships catching fire in the Strait of Hormuz within the month, and investors quickly assessed the risk of supply disruption. The rapid return of geopolitical premium in oil prices has triggered a resonance rise in bulk commodities. Although the direct raw material styrene within the range is constrained by demand, it is supported by rising remote costs, low market inventory, and continuous destocking at ports, resulting in overall fluctuations and price increases. Overall, the strong cost performance in October provided positive guidance for PS spot prices.
Supply and demand level: Since October, the operating rate of the domestic PS industry has been consistently low, and the willingness of enterprises to continue operating under high costs and losses is insufficient. In mid month, some companies aimed to control costs and reduce burden, causing the overall domestic load to drop to a historical low of 37.5%. Small scale resumption of work occurred in the latter half of the month. As of the end of the month, the domestic PS load capacity has rebounded to 40%, with a weekly output of nearly 68000 tons. The inventory position is controllable, and supply in some areas is tight. Manufacturers have a strong willingness to raise prices, and merchants are trying to overcharge. However, the traditional peak season signal is not strong at present, and the production of downstream products such as electrical appliances and packaging has only slightly increased, and the digestion of finished products is slow. Manufacturers mainly rely on immediate demand for goods, with few large-scale contract transactions. Currently, PS is still in a phase of weak supply and demand.
Future forecast
The domestic PS market rose in a stepwise manner in October. The production load of the aggregation plant has slightly increased at a low level, while consumer demand is average. Analysts believe that remote raw material crude oil has once again strengthened, and upstream raw materials in the industry chain have generally fallen due to its support. Due to the impact of cost regression, PS spot prices may find it difficult to fall in the short term. But in an environment of weak demand, downstream cost transfer is not smooth, resulting in limited capacity to undertake. It is expected that the PS market will enter a high-level consolidation stage in the short term, and it is recommended to closely monitor the crude oil market.