In the second quarter of 2026, the domestic styrene market experienced a significant correction from its highs.

The average quarterly price in Jiangsu was 9,333.3 yuan per ton, representing a sequential increase of 10.83% and a year-on-year rise of 21.75%.

The primary price driver shifted from geopolitical sentiment to a confluence of weak fundamental expectations and actual market realities.

Looking ahead to the third quarter, geopolitical factors remain the core variable, with costs expected to fluctuate within a medium-to-high range.

Supply and demand dynamics are forecast to strengthen initially before weakening, potentially leading to average monthly prices that rise first and then fall.



Q2 Price Review: A Sharp Correction from Peak Levels

Domestic styrene prices retreated from their highs in Q2 2026.

The average price in the Jiangsu market for the quarter was 9,333.3 yuan per ton.

While this marked a 10.83% increase from the previous quarter and a 21.75% rise year-over-year, the monthly trend showed a dramatic reversal.

The average price in April surpassed a five-year high, only to fall below the five-year average by June.

From April to May, the pricing logic transitioned from being dominated by geopolitical tensions to being pressured by weak fundamentals.

In June, the cost support weakened further following a US-Iran ceasefire, coinciding with a deterioration in the supply-demand balance, which amplified the price decline.

The quarter's price peak was 11,000 yuan per ton on April 7th, while the trough was 7,180 yuan per ton on June 26th.



Raw Material Costs: Weakening Support from Highs

Raw material prices trended lower from elevated levels throughout Q2, gradually eroding cost support for styrene.

During April and May, the "fight-and-talk" scenario between the US and Iran kept the Strait of Hormuz closed, injecting high volatility into international oil prices.

In June, as negotiations progressed toward a ceasefire and the strait reopened, oil prices experienced a broad decline.

The quarter overall saw oil prices fluctuate at high levels before falling sharply, with the downturn having a more pronounced impact on styrene.

Benzene imports were constrained by the strait closure, leading to consecutive drawdowns at main ports to low levels, which provided price support.

However, severe losses in downstream sectors fueled resistance to high-priced feedstocks.

This resistance capped benzene's gains in April and exerted significant negative feedback on the market in May and June, exacerbating its decline and further weakening cost support for styrene.

Despite the overall downward trend for styrene and its key feedstocks in Q2, average quarterly prices were higher than in Q1.

Brent crude rose 23.35% sequentially, benzene increased by 20.50%, while styrene's average gain was only 10.83%.

This disparity, where styrene's price increase lagged far behind its raw materials, compressed profits across all three primary production processes.

Profits for non-integrated ethylbenzene dehydrogenation (EB) units turned negative, plunging 950% quarter-on-quarter.

Integrated EB unit profits fell 23.31%, and PO/SM unit profits dropped 79.72%.

This profit squeeze sets the stage for potential supply-side adjustments in Q3.



Supply-Demand Dynamics: Initial Strength Gives Way to Weakness

The supply-demand structure for styrene strengthened initially before weakening in Q2, offering limited overall support to the market.

Total domestic supply decreased by 2.27% from the previous quarter but was up 3.63% year-on-year, primarily due to a month-on-month reduction in domestic production.

This decline resulted from several factors: the gradual implementation of planned maintenance at multiple facilities, reduced operating rates at some plants due to squeezed margins, and short-term outages from unexpected technical issues.

Domestic production for the quarter totaled approximately 4.515 million tons, down 1.98% from Q1.

Imports were around 2,800 tons, an insignificant volume that had minimal impact on total supply.



Total domestic consumption increased by 7.89% sequentially and 5.80% year-on-year, driven largely by robust export performance.

Domestic demand was generally lackluster; downstream consumption fell by 1% quarter-on-quarter.

High costs suppressed consumption, end-user demand was poor, and narrowing or negative profits in downstream industries led to lower overall operating rates instead of increases.

Exports, however, surged by 201% sequentially.

This was primarily fueled by overseas supply shortages stemming from geopolitical events.

The closure of the Strait of Hormuz disrupted crude oil and naphtha supplies to Japan, South Korea, and Southeast Asia, affecting styrene production there.

It also hindered exports of styrene from the Middle East, a key supplier to India and South Korea.

Consequently, import demand from India and South Korea increased significantly.

Additionally, concentrated maintenance at styrene plants in Europe and the US from March to May widened the supply gap in Europe, a net importer.

With relatively stable Chinese production during the geopolitical tensions and overseas shortages, foreign buyers exhibited panic purchasing, sustaining high export volumes despite elevated prices.

From late May into June, as the strait reopened in phases and the overseas maintenance season concluded, export transactions began to decline.



On a monthly basis, the supply-demand balance shifted from strength to weakness.

In April, some plant maintenance was delayed as operations remained profitable, leading to a less bullish fundamental picture than expected, which capped price gains despite rising oil prices mid-month.

Although the balance improved in May versus April, export shipments were concentrated in late May, slowing the pace of inventory drawdowns at main ports.

The subsequent reduction in June exports then pressured market prices.

Early June saw continued export shipments and inventory draws, providing fundamental support.

However, by mid-to-late June, the restart of multiple idled plants and the export decline weakened the supply-demand structure, amplifying the styrene price drop.



Q3 Outlook: Geopolitics to Remain Key Price Driver

Cost factors are expected to maintain medium-to-high volatility in Q3, with the persistence of geopolitical influence being a key watchpoint.

Over the next three months, developments in the Middle East and the status of the Strait of Hormuz will remain core variables for international oil prices.

Given the stalemate in US-Iran negotiations and cautious market sentiment, crude prices are likely to stay volatile within a medium-to-high range, with average monthly prices moderately lower than in Q2.

The main fluctuation range for oil is projected at $70-$90 per barrel, though a significant escalation affecting supply could push prices toward testing levels above $100.



For benzene, the Q3 market is expected to seesaw between low port inventories and negative feedback from downstream losses.

Prices will likely follow oil price movements, with potential for rebounds.

Monitoring the Middle East situation is crucial; if the strait remains fully open, benzene's supply-demand矛盾 could re-emerge, pressuring the market.

Average monthly prices from July to September are forecast to rise first and then fall.



The styrene supply-demand fundamentals are projected to strengthen initially before weakening in Q3, first supporting and then pressuring the market.

On the supply side, reduced operating rates and planned maintenance in July, including a planned shutdown at the Lihuayi plant late in the month, are expected to outweigh the impact of plant restarts.

Production in July is forecast to decrease by 0.43% from June, a revision from an earlier expectation of an 8.35% increase.

August production is anticipated to dip by 0.29%, followed by a 7.76% increase in September.

Imports are expected to remain minimal. Total styrene supply in Q3 is thus projected to decrease first and then increase.



On the demand side, July falls within the traditional consumption off-season.

However, lower styrene prices may improve downstream margins, potentially boosting operating rates at some plants.

Downstream consumption is forecast at approximately 1.3765 million tons, up 0.3% from June.

As the off-season winds down in August, pre-stocking for the peak "Golden September" period may begin early.

Coupled with new PS and EPS plant startups releasing incremental demand, consumption is expected to rise 5.25% month-on-month.

September marks the traditional peak season, with downstream operating rates continuing to recover, though the growth rate may narrow, leading to a forecasted 2.19% sequential consumption increase.

Furthermore, with fewer planned maintenance outages overseas in Q3 and Q4, exports are expected to decrease significantly from Q2 levels.

However, there remains a window for overseas plant recovery, and rigid demand from Asia and Europe may persist.

If Middle East tensions escalate again, buying interest from India could increase, potentially boosting exports in August-September and expanding total demand growth for those months.



In summary, the styrene supply-demand balance over the next three months is forecast to strengthen before weakening.

The balance in July may weaken slightly from June, but the implementation of multiple rate cuts and shutdowns has improved the outlook compared to prior expectations.

With renewed Middle East conflict, prices in the latter half of July may find upward momentum, supporting a higher average price for the month.

The persistence of geopolitical risks will be critical.

In August, the supply-demand gap could turn negative, potentially supporting further price increases if tensions persist.

By September, a recovery in the styrene-benzene spread may encourage idled plants to raise operating rates, weakening the supply-demand structure compared to August and likely dragging prices lower.

Overall, styrene prices from July to September are projected to follow a pattern of rising first and then falling, with average prices forecast around 8,400, 8,800, and 8,350 yuan per ton, respectively.

Key risks include rapid normalization of Strait of Hormuz traffic and styrene exports falling short of expectations.