Recently, international oil prices have continued to rise. However, the cost support from rising oil prices cannot be uniformly transmitted to all downstream products, leading to a divergence in the price trends of downstream varieties such as pure benzene and styrene. The dynamics of the benzene-styrene (BZ-SM) spread have consequently become a key focus of market attention.
According to Tang Jianlin, an analyst at Zijin Tianfeng Futures, the current strength in benzene prices is the result of multiple overlapping drivers. First is the profit-taking activity in BZ-SM spread positions. As a key indicator of their relative strength, the BZ-SM spread has been rising continuously since mid-December last year, increasing from 1,200 yuan per ton to 1,715 yuan per ton by January 13. After arbitrage funds took profits, benzene prices outperformed styrene. Second, the rise in crude oil prices has been directly transmitted to benzene, with the premium closely linked to the situation in the Middle East. Third, the imminent restart of two styrene units will boost benzene demand, as styrene is a core downstream product, creating supportive demand expectations.
However, Tang Jianlin cautions that the fundamentally weak structure of the benzene market has not yet improved. Benzene supply remains stable while demand is sluggish, and port inventories continue to accumulate, surpassing historical highs, presenting a hidden pressure that constrains sustained price increases.
In contrast to benzene, styrene enjoys a more solid fundamental base, which is the core reason for the continued widening of the BZ-SM spread.
As explained by Tang Jianlin, positive factors for styrene have recently converged: export orders have been finalized, multiple units on the supply side remain under maintenance, and inventories are consistently declining. Nevertheless, alongside these fundamental improvements, the high prices may trigger negative demand feedback from the downstream "Three S" industries (ABS, PS, EPS), potentially reducing their purchasing willingness.
Looking ahead at the future trajectory of the BZ-SM spread, Tang Jianlin believes that, considering styrene's supply concerns and the risk of negative demand feedback, the spread is highly likely to weaken subsequently.
In contrast, Zhang Xiaocui, an analyst at SCI, holds a different view. "Looking forward, the spread between the two may maintain its current high level," she stated. She indicated that currently, available port inventories of styrene are tight, and the market had previously initiated spread-narrowing operations as the gap widened. She expects that subsequent short-covering demand will continue to support the spread.
Market participants generally indicate that geopolitical risks remain a significant short-term driver for oil-related product prices. Traders need to closely monitor changes in the BZ-SM spread, the implementation of plant maintenance schedules, and the recovery of end-user demand. While seeking trading opportunities, they must also remain vigilant about correction risks stemming from underlying fundamental weaknesses.
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