Market Strategy Assessment for the Entire Styrene (SM) Value Chain: Second Half of 2026 – 2027

III. In-Depth Medium- to Long-Term Analysis of Global and Domestic Supply-Demand Fundamentals 3.1 Supply Side: Global Capacity Expansion Peaks Amid Rising Dominance of Integrated Domestic Capacity 3.1.1 Global Supply Landscape: The Middle East and Southeast Asia Emerge as Core Hubs for New Capacity; Global Trade Flows Undergo Restructuring • Global Capacity Base: As of early 2026, global styrene capacity stands at approximately 42.8 million tons/year, concentrated primarily across three regions—Northeast Asia (China, South Korea, Japan), the Middle East, and North America—accounting collectively for over 85% of total global capacity. • Global New Capacity Additions: From the second half of 2026 through 2027, over 6 million tons/year of new styrene capacity is scheduled to come online globally, including: 2.1 million tons/year in the Middle East (1.2 million tons/year from Saudi Aramco; 0.9 million tons/year from Kuwait Petrochemical Industries Company), 1.3 million tons/year in Southeast Asia (0.7 million tons/year from Thailand’s PTT; 0.6 million tons/year from Indonesia), 2.8 million tons/year in China, and 0.5 million tons/year in North America. No large-scale new capacity is planned in South Korea or Taiwan. • Global Supply Characteristics: Newly added Middle Eastern capacity leverages low-cost crude oil advantages, achieving fully loaded production costs approximately RMB 1,500–2,000/ton lower than those of non-integrated domestic plants. Its output will be directed primarily toward China, Southeast Asia, and Europe, positioning the region as a core supplier in global trade markets. New Southeast Asian capacity is largely integrated with downstream PS and ABS units, generating limited merchant volumes and exerting minimal disruption on global trade flows. Meanwhile, Western and European capacities continue contracting under pressure from high energy costs and stringent environmental regulations; by 2027, their share of global capacity will fall below 10%, and import dependency will rise steadily. • Global Plant Operating Rhythm: In the second half of 2026, multiple large-scale facilities across Saudi Arabia, Kuwait, and South Korea enter concentrated maintenance cycles, resulting in a temporary contraction of effective global supply. In 2027, new capacity additions are concentrated in Q2 and Q3, significantly releasing supply-side pressure. Industry-wide operating rates are projected to decline from a 2026 average of 78% to 72% in 2027. 3.1.2 Domestic Supply Landscape: Continuous Expansion of Integrated Capacity and Accelerated Exit of Smaller-Scale Producers • Domestic Capacity Base: As of early 2026, China’s total styrene capacity reaches 19.2 million tons/year, of which 62% is integrated refinery-petrochemical capacity, 18% is PO/SM co-production capacity, and 20% consists of standalone ethylbenzene dehydrogenation units. • Domestic New Capacity Plans: Between the second half of 2026 and 2027, China plans to add 2.8 million tons/year of new styrene capacity—all integrated refinery-petrochemical projects, with no new standalone ethylbenzene dehydrogenation units. Of this, 0.8 million tons/year will commence operations in Q4 2026, while the remaining 2.0 million tons/year will come online in Q2–Q3 2027. By end-2027, China’s total styrene capacity will exceed 22 million tons/year, and the share of integrated refinery-petrochemical capacity will rise above 75%. • Output and Operating Rate Evolution: In the second half of 2026, recovering industry profitability will sustain integrated plant operating rates above 90%, while non-integrated units remain constrained to 30%–50%. Overall industry operating rates will rebound to 75%–80%. In 2027, following the commissioning of new capacity, overall operating rates will ease to 70%–75%; operating rates for standalone ethylbenzene dehydrogenation units will persistently fall below 40%, prompting permanent shutdowns of several high-cost facilities. It is estimated that over 1.5 million tons/year of outdated domestic capacity will exit the market between the second half of 2026 and 2027.

The Global Chemical Industry Landscape Is Being Restructured—Supply Chain Transformation Amid ‘East Rising, West Falling’

According to Deloitte statistics, over 120 chemical plants worldwide have announced closures or temporary idling since 2022—with Europe bearing the brunt. Japan and South Korea face constraints due to insufficient domestic feedstock supply, while escalating raw material shortages triggered by Middle Eastern conflicts further compound the challenges. Against this backdrop, China—leveraging its triple advantages of full-industry-chain integration, breakthroughs in indigenous technology, and a vast domestic demand market—is emerging as the central hub for global chemical capacity relocation. Correspondingly, the global chemical supply chain market landscape is undergoing profound transformation... 01 West Falling Cliff-edge Closures of European Chemical Capacity Europe’s chemical industry is experiencing massive contraction driven by high energy prices, carbon tariffs, and stringent environmental regulations. Data shows that from 2022 to 2025, Europe’s chemical sector permanently shuttered a cumulative 37 million tons of capacity—9% of its total capacity. By 2025, Europe’s share of global chemical output had already declined to 13%. The wave of closures continues into 2026, with aging capacity exiting en masse. • Dow Chemical formally approved the closure of three upstream chemical production bases—in Böhlen and Schkopau (Germany) and Barry (UK)—in July 2026. • BASF announced in August 2026 the permanent shutdown of two additional ammonia synthesis units at its Ludwigshafen site. • TotalEnergies plans to close its 550,000-ton/year ethylene cracker in Antwerp, Belgium, by end-2027. • SABIC has confirmed the permanent retirement of two large-scale cracking units located in the Netherlands and the UK. Share of Chemical Plant Closures by European Country While numerous facilities are shutting down, Europe is not entirely devoid of new projects. Emerging initiatives include INEOS’s ethylene/propylene project, Catalyxx’s bio-based chemicals platform, and BASF’s catalysts for 3D printing—concentrated in two strategic directions: securing feedstock supply and developing future-oriented, high-value-added green technologies. Yet these isolated projects are far from sufficient to offset the pace of closures. According to a report by Cefic (the European Chemical Industry Council), the primary root cause of the ‘West Falling’ trend is insufficient energy cost competitiveness—accounting for half of all contributing factors—followed by demand-related issues (19%), overcapacity (9%), and regulatory burdens (8%). These structural challenges are unlikely to reverse in the long term. As Cefic’s Director General bluntly stated: “The rate at which companies are closing facilities far exceeds the pace of new investment project construction—the European chemical industry is shrinking.” Note: ‘West Falling’ specifically refers to aging naphtha-based plants in Europe (and partially in Japan and South Korea). The petrochemical sectors in the U.S. and the Middle East remain robust, retaining strong pricing power. 02 East Rising China Emerges as the Global Chemical Hub China’s chemical logistics market reached USD 130.72 billion in 2025 and is projected to reach USD 167.56 billion by 2031, growing at a CAGR of 4.19%. Transportation accounts for 64.77% of chemical logistics revenue. • Production Accounts for Nearly Half of Global Output China currently produces approximately 42% of the world’s major chemical products, having built the largest, most comprehensive, and most resource-rich chemical production system globally. • Capital Expenditure Leads the World In 2024, global chemical industry investment totaled EUR 284 billion, of which China contributed 47%. China’s chemical industry capital expenditure amounted to EUR 127 billion—46.6% of the global total—while the EU accounted for only 10.4% and the U.S. just 9.0% during the same period.

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European styrene stakeholders prioritized supply security and contract flexibility at the EPCA conference amidst market tightening from Middle East conflicts and ethylbenzene diversion. 2027 contract negotiations remain slow due to geopolitical uncertainties impacting regional import flows.

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