Since the start of the year, styrene prices have moved higher, with port spot prices rising from around 6,850 yuan/mt to about 7,200 yuan/mt. Slow price transmission to end products has kept downstream margins in persistent losses, strengthening resistance to feedstock procurement. Some plants have reduced operating rates or shut units, while increased export transactions have tightened circulating supply in the domestic market.
Recent price gains have lifted styrene cash flow to a 2025 high, supporting full operating rates at non integrated units. However, weaker benzene prices have provided limited support to integrated producers. Domestic styrene output in January is expected to reach a record high. Sinochem Quanzhou plans to restart in late January, while Bohua is expected to restart in early February. With more units able to operate steadily in February, port inventories are likely to remain at low levels in January. Given available tank capacity at ports and plants, the probability of industry wide operating rate cuts in February is low.
Driven by gradually increasing export demand, port destocking has led to a clear improvement in supply demand fundamentals, with styrene prices rising significantly above benzene. However, downstream product prices have been unable to follow, expanding industry losses to relatively low levels since 2025. Some EPS and PS producers have brought forward operating rate cuts. End demand is mainly from home appliance manufacturers, and the three major styrene downstream sectors are largely producing against orders or overselling locked orders. During the sharp price rise, feedstock procurement has remained passive. To maintain order stability, ABS operating rate reductions have been limited despite continued negative cash flow, while integrated styrene producers have maintained relatively stable operations. In contrast, EPS and PS have a lower proportion of order based production than ABS, resulting in inventory accumulation. Rising styrene costs lift EPS and PS prices, but inventory gains coexist with processing margin losses, prompting producers to actively cut rates to digest stocks. This has become a key driver behind the decline in EPS and PS operating rates, while ABS rates have remained relatively stable despite prolonged losses.
From an upstream and downstream balance perspective, first quarter styrene fundamentals are better than in previous years, supporting processing margin repair, while downstream sectors are passively lifted and remain in a digestion phase. EPS and PS producers are easing pressure through active supply reductions, compounded by weaker demand around the Lunar New Year holiday. Pressure on styrene is expected to become more evident in March. Currently strong industry margins are encouraging aggressive overselling by styrene producers to lock in stable February production. Inventory accumulation is likely in February, alongside high upstream benzene inventories, which could sharply increase port tank capacity pressure. This may lead to a reversal in styrene cash flow and broader operating rate cuts. Hengli Petrochemical and Gulei Petrochemical have maintenance planned for March.
