Styrene prices have risen sharply amid escalating geopolitical tensions in the Middle East and a significant increase in production costs. The surge in international crude oil prices has pushed up costs across the styrene value chain, while continued destocking at major ports has provided additional support to spot prices.

However, downstream buyers remain cautious about accepting high-priced raw materials. Weak demand, growing production losses, and limited willingness to restock have gradually emerged as constraints on further price increases. Overall, cost-driven factors have remained the primary force shaping the styrene market, while weak downstream fundamentals continue to limit the upside.

1. Middle East Geopolitical Tensions Escalate, Crude Oil Surges and Strengthens Cost Support

During the period under review, the weekly average price of Brent crude rose to USD 97.59 per barrel, up USD 5.63 per barrel, or 6.12% week-on-week.

The escalation of geopolitical tensions in the Middle East, together with Houthi attacks on Saudi oil facilities, intensified concerns over potential supply disruptions in major oil-producing regions. As a result, the geopolitical risk premium increased rapidly, pushing international crude oil prices sharply higher and providing strong cost-side support across the chemical industry.

East China spot benzene prices also surged alongside crude oil, with the weekly average reaching RMB 9,101/tonne, an increase of RMB 715/tonne, or 8.53% week-on-week.

The sharp rise in benzene prices was primarily driven by geopolitical factors. Essential contract-based procurement and continued port inventory drawdowns further tightened spot availability, pushing prices higher in the short term.

However, downstream acceptance of high-priced benzene remained limited, while forward-order activity was relatively weak. Market participants also remained concerned about potential supply pressure from the restart of production units and the recovery of imports. As a result, forward-month prices lagged significantly behind spot prices.

Overall, the strength of the spot benzene market has been driven largely by the short-term geopolitical risk premium rather than a meaningful improvement in underlying fundamentals.

2. Continued Port Destocking Keeps Spot Supply Tight Despite Rising Domestic Production

On the supply side, the concentrated restart of several domestic production units has increased styrene output. However, continued inventory drawdowns at major ports have kept spot availability relatively tight, providing a solid floor for prices.

Domestic styrene production increased to 323,800 tonnes for the week, up 6,500 tonnes, or 2.05% week-on-week. The industry capacity utilization rate also climbed to 64.55%, an increase of 1.28 percentage points.

During the period, the Jingbo Sida-Rui unit resumed styrene production, while the Lihuayi unit restarted on September 10. Meanwhile, Anqing Petrochemical entered scheduled maintenance. The additional production from the restarted units outweighed the supply losses from maintenance, resulting in higher overall production and operating rates.

Nevertheless, profitability remains a major constraint. Non-integrated styrene producers are still operating at a loss, limiting their willingness to significantly increase operating rates. Therefore, while supply has increased, the potential for a substantial further expansion remains relatively limited.

Port inventories continued to decline. Sampled styrene inventories in Jiangsu stood at 37,300 tonnes, down 2,500 tonnes, or 6.28% week-on-week. Commercial inventories fell to 21,800 tonnes, down 1,700 tonnes, or 7.23% week-on-week.

During the period, withdrawals from storage terminals exceeded incoming shipments, allowing the destocking trend to continue. Lower spot availability provided additional support for styrene prices.

Looking ahead, incoming shipments are expected to decline slightly, while downstream withdrawals are likely to remain relatively stable. As a result, port inventories may continue to decline modestly in the near term.

3. Domestic Demand Weakens Further as Downstream Buyers Resist High Prices

Demand remains the weakest link in the current styrene market.

Combined consumption of the three major downstream derivatives—PS, EPS, and ABS, collectively known as the "3S" sector—fell to 234,300 tonnes, down 1,800 tonnes, or 0.76% week-on-week.

Although the market had expected a traditional "Golden September" demand recovery, end-use industries have yet to show a meaningful improvement. Downstream manufacturers are facing increasing margin pressure and are becoming increasingly cautious about purchasing raw materials at elevated prices.

Most buyers are therefore focusing on small, essential purchases rather than actively building inventories. Styrene exports remained stable at around 30,000 tonnes for the week, providing only limited support to overall demand.

EPS

EPS capacity utilization recovered to 55.20%, up 3.89 percentage points week-on-week, while the average weekly price increased by RMB 530/tonne, or 5.22%.

Manufacturers raised finished-product quotations in response to rapidly increasing styrene costs. Short-covering activity at the beginning of the week supported a temporary increase in trading activity. However, as prices continued to rise, downstream losses deepened and buyers became increasingly reluctant to chase the market.

Overall trading activity subsequently weakened.

PS

PS capacity utilization declined to 45.30%, down 3.20 percentage points week-on-week, while the average weekly price increased by RMB 590/tonne, or 6.20%.

Higher raw material costs pushed manufacturers to raise quotations. Although some producers voluntarily reduced operating rates and inventories declined, resistance from end-users to higher prices limited the ability to pass rising costs through the value chain.

As a result, PS producers continued to face significant margin pressure.

ABS

ABS capacity utilization edged down to 56.40%, a decrease of 1.10 percentage points week-on-week, while the average weekly price increased by RMB 690/tonne, or 6.20%.

Supported by rising raw material costs and news of production cuts at several facilities, manufacturers maintained a firm pricing stance and significantly increased spot quotations.

However, downstream purchasing power remained limited, and transaction volumes for high-priced cargoes were insufficient. The ABS sector therefore remained under substantial profitability pressure.

Overall, the expected "Golden September" demand recovery has yet to materialize. Domestic end-user demand remains weak, while exports are relatively stable. With most downstream sectors experiencing significant losses, resistance to high-priced styrene and other raw materials is increasing.

The risk of negative downstream feedback is therefore building, which could limit the upside potential for styrene prices.

4. Styrene Industry Chain Remains Under Significant Profit Pressure

Profitability across the styrene industry chain remains weak.

During the period, losses at domestic styrene production units narrowed slightly. The theoretical average weekly profit for non-integrated styrene producers was approximately RMB -436/tonne, representing a reduction in losses of RMB 33/tonne week-on-week.

The rise in styrene prices, driven primarily by geopolitical factors, widened the styrene-benzene spread and helped ease production losses. However, profitability has not yet returned to positive territory.

Downstream profitability remained under pressure. GPPS losses widened further, while EPS losses narrowed slightly. ABS losses also narrowed significantly but remained substantial.

The generally weak profitability environment is discouraging downstream companies from building inventories and is limiting their willingness to actively replenish styrene stocks.

5. Market Outlook: Geopolitical Support Remains, but Supply and Demand Risks Are Increasing

Looking ahead, the styrene market is likely to remain highly sensitive to geopolitical developments.

On the cost side, the US-Iran standoff remains unresolved, while shipping risks in the Strait of Hormuz continue to create uncertainty. International crude oil prices may retain short-term upward momentum, providing a strong cost floor for styrene.

However, if geopolitical tensions ease rapidly, the risk premium currently embedded in crude oil prices could unwind quickly, weakening cost-side support for styrene and other petrochemical products.

On the supply side, although scheduled maintenance at some facilities will offset part of the production increase, overall styrene output still has room to rise as additional units restart. At the same time, relatively low port inventories and continued modest destocking should continue to provide some support for spot prices.

On the demand side, the performance of the "Golden September" peak season has fallen short of expectations. Downstream losses have deepened, reducing buyers' willingness to accept high-priced raw materials. This raises the risk of a negative feedback loop involving lower operating rates, production cuts, and weaker styrene demand.

Conclusion

Overall, styrene prices are likely to remain elevated but volatile in the near term.

Unless geopolitical tensions ease significantly, strong crude oil prices and relatively tight spot availability should continue to provide support. Nevertheless, rising domestic supply, weak downstream demand, and increasing resistance to high-priced raw materials could trigger periodic price corrections.

Therefore, the styrene market is expected to remain in a pattern of high-level fluctuations, with geopolitical developments and downstream demand serving as the key factors to watch.