In mid-May, the gap between the domestic mainstream East China and South China markets has significantly widened. As of May 16th, the price difference between East China and South China styrene reaches 575 yuan/ton, while the current shipping cost from Jiangsu to Guangdong is 300-350. RMB/ton, the arbitrage window between the two places is open.
At present, there are two main reasons for the widening of the spread between East China and South China. The first is that the mainstream East China styrene market is weak in the middle of May. According to the data of China UnionPay, in early May, the East China market continued in late April. The strong trend has quickly risen from around RMB10,800/tonne to RMB11,100-11,200/tonne. However, after the rapid pull-up in the East China market, the speculative interest of traders has fallen, and some businesses have not been confident in the long-term market. Significantly lower, the market price has long been around 11150.
Another reason is that at a time when the mainstream East China price continues to rise, the South China market has risen sharply. Its main support force lies in the relatively tight supply of local products. Since the middle and late April, the demand in southern China has rebounded, and the EPS plant has recovered. The start of construction increased to around 80%, and UPR factory construction started at 6-70%, while the overall shipment to Hong Kong was relatively small, resulting in a tight import spot supply. According to the preliminary understanding of Jinlianchuang, local mainstream importers are After arriving at the beginning of the month, most of the spot goods have been sold. With the supply of imported goods being less, the ex-factory price of CNOOC Shell was continuously raised. The market's center of gravity was supported. As of the end of the draft, the local mainstream in South China was quoted at 11700- 11,750 yuan / ton.
According to Jinlian, the current shipping cost between East China and South China is between RMB 300-350/ton. With the spread widening between the two countries, the current arbitrage window is already open. The buying in the East China market is weak and the transaction volume continues to shrink. Under the circumstances, some of the holders have actively sought to arbitrage the South China market. In the short term, there will be actual arbitrage operations.
In a comprehensive view, with the supply side of the East China market tight, some of the sources of goods flow to South China, which will form a strong support for local prices in East China. Local shipments arriving in southern China will also ease the tight supply pattern. According to analysts from lianchuang styrene, in the coming days, prices in east and south China markets may deviate again. At that time, it may show a strong east China and a fall in south China.